Question

The least number of complete years in which a sum of money put out at 20% compound interest will be more than double, is

a. 3 years
b. 4 years
c. 5 years
d. 6 years

Answer 1

The least number of complete years in which a sum of money put out at 20% compound interest will be more than double is 3 years.

Step-by-step explanation:

To find the least number of complete years in which a sum of money put out at 20% compound interest will be more than double, we can use the compound interest formula:

A = P(1 + r/n)^(nt)

Where:

• A = final amount
• P = principal amount (initial investment)
• r = annual interest rate (as a decimal)
• n = number of times the interest is compounded per year
• t = time in years

Let's assume the principal amount is $1. To double the amount, we need A to be greater than $2.

Substituting the values into the formula:

2 = 1(1 + 0.2/n)^(nt)

By trial and error, we can determine that after 3 years, the sum of money put out at 20% compound interest will be more than double. Therefore, the answer is 3 years (option a).