The annual rate, r , compounded annually, it takes for$1 dollar to grow to B dollars in 3 years is given by the formula B=(1+r)^3 . Find the rate necessary for a dollar to double in 3 years.
Give your answer to one decimal place, if required.
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Answer:
r=26.0%
Step-by-step explanation:
If with the annual rate, r , compounded annually, it takes for$1 dollar to grow to B dollars in 3 years is given by the formula
Then, the general formula for the amount after 1 dollar is accumulated for n years at a rate r is
the double of 1 dollar is 2 dollars
the time given is 3 years
Therefore,
we make r the subject of the formula as follows
r=25.9921%
to 1 decimal place
r=26.0%
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