How do you use the formula to solve these problems: Initial deposit of $300, for 2 years and final value is $500?

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Answer 1 · 2016-01-04T01:47:44

Here is the formula assuming annual compound interest ...

#300(1+i)^2=500#

#(1+i)^2=500/300=5/3#

Now take the square root of both sides ...

#sqrt[(1+i)^2]=sqrt(5/3)#

#1+i=sqrt(5/3)~~1.29#

#i~~1.29-1=0.29# or #29%#

So, the annual interest rate is #~~29%#

Hope that helps