2019 · Q44
What is the least number of complete years in which a sum of money put out at 40% annual compound interest will be more than trebled?
Elementary MathematicsSimple and Compound Interest
- A3
- B4
- C5
- D6
Explanation
At 40% compound interest the amount after n years is P*(1.4)^n, and trebling needs (1.4)^n > 3. Since 1.4^3 = 2.744 < 3 but 1.4^4 = 3.8416 > 3, three complete years are not enough while four years suffice. Hence the least number of complete years is 4, option (b).