Mr. Madoff invests 1000 dollars in a fund that compounds annually at a constant interest rate.  After three years, his investment has grown to 1225 dollars.  What is the annual interest rate, as a percentage?  (Round your answer to the nearest integer.)
To find the annual interest rate, I need to know how much interest Mr. Madoff earned each year. I can use the formula for compound interest: A = P(1 + r)^t, where A is the final amount, P is the initial amount, r is the annual interest rate, and t is the time in years. In this case, A = 1225, P = 1000, and t = 3. I want to find r. I can rearrange the formula to isolate r: r = (A/P)^(1/t) - 1. Plugging in the values, I get r = (1225/1000)^(1/3) - 1. Using a calculator, I find that r is approximately 0.07, or 7%. To round to the nearest integer, I can say that the annual interest rate is 7%. 