In how many years a sum placed on compound interest becomes 8 times of itself, if it becomes twice in 6 years?
Answer & explanation
Correct answer: option 2
Assume the sum to be P.
Compounding annually,
Amount becomes double in 6 years,
A = P(1+ r/100)^T
2P = P(1+ r/100)^6
(1+r/100)^6 = 2
1+ r/100 = 2^(1/6) = 1.1224
r = 12.24
For amount to be 8 Times,
8P = P(1+r/100)^T
(1+12.24/100)^T = 8
(1.1224)^T = 8
T = 18
The correct answer is Option (2) → 18