# RRSP problem Plz help me

1. Mar 18, 2005

### aisha

RRSP problem Plz help me !!

Stacey bought a $1000 RRSP today. After one year she will add$2500. By the end of the second year, the money will be grown to $3851 as it earned interest over time. What was the interest rate? a)Apply the compound interest formula to both$1000 and $2500 investments. Assume that interest is compounded annually at the rate i, to grow to$3851 to get:

$$1000(1+i)^2 +2500(1+i)=3851$$

I dont have to do anything in this part right there is nothing they have already applied the compound interest formula to both $1000 and$2500

b)If this equation is written as [tex]1000x^2 +2500x -3851=0 [tex] what does x represent?
I think it represents the interest plus 1 is this correct? Is there a better way to answer this question

c)Use the quadratic formula and your calculator to solve for x and i.

Ok I will use the quadratic formula to solve for x and I will get two values then I will subtract make x=(1+i)^2 and solve for i there will be two interest rates and two values for x is this correct? The amount I will get for i will it be in percent ?

d)There are two solutions to the quadratic equation . Which one would you choose? Why?
The positive one because interest can't be negative, im not too sure.

Last edited: Mar 18, 2005
2. Mar 18, 2005

### shmoe

x=1+i, no square on the right side. What value do you get for i? Does it look like a percent?

Why the doubt? Would 1+i being negative many any sense at all?