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

The Correct Option is B

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)