Question

In 2007, Rachel borrowed $800 from a bank; she has repaid $2,700 after three years. At what rate of compound interest did the bank lend money to Rachel? (Interest is compounded annually). Hint: A = P (1 + r)n A – amount of money paid after n years P – principal amount r – interest rate n – number of years

Answer 1

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Answer 2

\[ \large 2,700 = 800(1+r)^{3} \]

Answer 3

\[\large \frac{ 2700 }{ 800 } = (1+r)^3\]
\[\LARGE \sqrt[3]{\frac{ 2700 }{ 800 }} =1+r\]
\[\LARGE \sqrt[3]{\frac{ 2700 }{ 800 }} -1=r\]
r=0.5