trouble with word problem

G

Guest

Guest
Venture capital.
Henry invested $12,000 in a new restaurant. When the restaurant was sold two years later, he received $27,000. Find his average annual return by solving the equation 12,000(1+ r) = 27,000.

12,000(1+2)=27,000
12,000*3=36,000

This is what I have so far.
 
birdbook said:
...by solving the equation 12,000(1+ r) = 27,000.
12,000(1+2)=27,000
Click to expand...
Why are you assuming that r = 2? Aren't you supposed to be solving for the value of r?

Eliz.
 
...and

12,000*2=24,000

Thus, you have established that r is between 2 and 3.

However, this is not a good problem. If you want Average Annual, you'll have to do something else. Are you SURE this is the EXACT wording of the problem statement?
 
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