QA – Placement Quizzes | Compound Interest | Question 14

The least number of complete years in which a sum of money put out at 20% compound interest will be more than doubled is:
(A) 6
(B) 4
(C) 5
(D) 3


Answer: (B)

Explanation: Let the Principal be P. Then,
P(1 + 20%)^n > 2P
Or, P(1 + 1/5)^n > 2P
Or, P(6/5)^n > 2P
Or (6/5)^n > 2.
Now,
(6/5)^3 = 1.728
(6/5)^4 = 2.074
Therefore, in 4 years.

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