Use A = P(1+r)^t to find the interest rate.

Question

$2000 grows to $2420 in 2 years.

I have no idea how to go about this problem! Your help is appreciated. Thank you!!

Answer 1

You want to solve for r

2420 = 2000 (1+r)^t
(1+r)^2 = 2420/2000 = 1.21
1+r = sqrt(1.21) = 1.10

r = 0.10 = 10%