How long will it take a sum of money invested at 5% p.a simple interest to increase its value by 40%?
Answer & explanation
Correct answer: option 2
Assuming the value to be 100, according to the question value increases by 40% i.e. 140. So, the simple interest comes out to be 40.
Formulae for SI = \(\frac{\text{P x R x T} }{ 100}\) = 40
Putting the values in the formulae:
\(\frac{\text{100 x 5 x T} }{ 100}\) = 40
\(\frac{\text{500T} }{ 100}\) = 40
5T = 40
T = 8
Thus, the value will increase by 40 % in 8 years