Question

A finance company declares that, at a certain compound interest rate, a sum of money deposited by anyone will become 8 times in three years. If the same amount is deposited at the same compound rate of interest, then in how many year will it become 16 times ?

• A. 5 years
• B. 4 years
• C. 6 years
• D. 7 years

Answer 1

Answer: (B)

4 years

Answer 2

Let the sum of money be $P$ and the rate of interest be r.
According to the formula,
Amount $(A)$ = $(P)$ Principal \times$$[1-\frac{r}{100}]^n

$A=8P=P\times[1+\frac{r}{100}]^3$

After solving the equation, we get $r=100$

$A=16P=P\times[1+\frac{100}{100}]^t$

After solving the above equation, we get $t=4$ years.
The correct option is (B)