Math

Deana invests some money that earns interest compounded annually. At the end of the first year, she earns $400 in interest. At the end of the second year, she earns $432 in interest.
a) what interest rate, compounded annually, is deana earning?
b) how much did she invest?

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  1. I think you can do the following:

    P*R=I

    Where

    P=principal=amount investere
    R=interest rate
    and
    I=amount in interest

    You have two equations.

    1.)

    P*R=400

    and

    (P+400)*R=432

    ****The principal now includes the interest from the previous year.

    Solving for P (Equation 1):

    P=400/R

    Plug into equation 2, and solve for R:

    (400/R+400)*R=432

    400+400R=432

    400R=32

    R=32/400

    R=0.008=0.8%

    You know R, so solve for P:

    Using equation 1:

    P=400/R

    P=400/0.008

    P=$50,000

    1. 👍
    2. 👎
  2. Fixed a typo: Look for #%^

    I think you can do the following:

    P*R=I

    Where

    P=principal=amount invested (#$^)
    R=interest rate
    and
    I=amount in interest

    You have two equations.

    1.)

    P*R=400

    and

    (P+400)*R=432

    ****The principal now includes the interest from the previous year.

    Solving for P (Equation 1):

    P=400/R

    Plug into equation 2, and solve for R:

    (400/R+400)*R=432

    400+400R=432

    400R=32

    R=32/400

    R=0.008=0.8%

    You know R, so solve for P:

    Using equation 1:

    P=400/R

    P=400/0.008

    P=$50,000

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    2. 👎

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