Question

A company publishes to its customers that at a certain compound interest rate, a sum of money deposited by anyone will become 8 times in 3 years. If the same amount is deposited at the same compound rate of interest, then in how many years will it become 16 times ?

A.
4 years
B.
3.5 years
C.
3 years
D.
4.5 years

Accepted Answer

A. If a sum becomes $8$ times in $3$ years, then $(1+r)^3 = 8 \Rightarrow (1+r) = 2$. For the sum to become $16$ times in $t$ years: $(1+r)^t = 16 \Rightarrow 2^t = 16 = 2^4 \Rightarrow t = 4$ years.

Compound interest growth time

Explanation

Practise this under exam conditions