Need help.....

Pablo has $4200 to invest for collage.

A. If Pablo invest $4200 for 3 years and earns $630. What is the simple interest rate?

B. Pablo's goal is to have $5000 after 4 years. Is this possible invests with a rate of return of 6%? Explain



Answer :

ok lets see if i can explain this properly. sorry it's long but i had to explain it properly 

A) to calculate the final value received at the end of a period of time when the percentage is known we divide the percentage by 100 to give it to us as a decimal ( lets call this "X". this value is then added to 1 to give 1+X. 
  1+X is then put to the power of the period of time passed. in this case 3. so this gives us 1+X to the power of 3.
   the initial value is then multiplied by 1+X to the power of three to give the value of the final answer. 
   so the equation used is final value = initial value * (1+X)^3
   to give us the percentage we rearrange the equation to give us.
   x= (cube root of,  final value/initial value)  -1
     = (cube root of, 42830/42000) -1
     =0.0065 to two sig figs
     as mentioned before to find X we divide the interest rate by 100. so to find the interest rate here we must multiply X by 100
 =0.65%
  
B) 6%/ 100 = 0.06
   0.06+1=1.06
   1.06^4=1.263 to 3 decimal places
   1.263*42000=53046
 yes pablo will have 50000 at the end of the 4 years

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