After 5 years Lily has $750+$225 = $975
The equation for interest rate looks like:
750 x^5 = 975
x^5 = 975/750
x^5 = 1.3
x = \(\sqrt[5]{1.3}\)
x = 1,0538
That means that interest rate is approximately 5,5% (B)
The reason for this calculation is because each year you multiply your money with interest rate and add that to your starting money.
After one year you will earn
750 + 750 interest rate = money after 1 year.
After 5 years we multiply 5 times so our interest rate is x^5 and money after 5 years is 750 + 225.
