WP7-Find interest rate based on investment formula

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Taught by YourMathGal
  • Currently 4.0/5 Stars.
6302 views | 1 rating
Part of video series
Meets NCTM Standards:
Lesson Summary:

In this lesson, the student learns how to find the interest rate for an investment problem. They are given a formula and must solve the equation by factoring. The problem involves finding the interest rate if $2,000 increased to $2,420 in two years, and the answer must be written as a percent. While this is a mouthful, it's a real-life formula that can be used in investing. The lesson takes the student step by step through the process of working out the formula and factoring it to find the answer, which in this case is 10%.

Lesson Description:

This is a Word Problem you solve by writing an equation and factoring. Word Problem 7 - Investment problem-At the end of 2 years, P dollars invested at an interest rate r compounded annually increases to an amount, A dollars, given by a formula shown in video. Find the interest rate if $2000 increased to $2420 in 2 years. Write the answer as a percent.

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Questions answered by this video:
  • How do you solve investment word problems in math?
  • How do you write and solve a quadratic equation involving the equation A = P(1 + r)^2?
  • How can you find the interest rate if a $2000 investment increased to $2420 in two years?
  • How do you solve the equation 2420 = 2000(1 + r)^2?
  • How do you solve a quadratic equation if it does not equal zero?
  • How do you factor and solve 0 = 2000r^2 + 4000r - 420?
  • How do you know when you can eliminate an answer that does not make sense in a word problem?
  • Staff Review

    • Currently 4.0/5 Stars.
    Investment problems like this one are very common in math, and this video shows the method for writing out the equation as well as solving it. This is a must-watch tutorial for anyone learning to solve investment problems.