Multiple choice

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?

  1. 3

  2. 4

  3. 5

  4. 6
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

We need (1 + 0.4)^n > 3, which is 1.4^n > 3. For n=1, 1.4; n=2, 1.96; n=3, 2.744; n=4, 3.8416. Thus, 4 years are required.

AI explanation

The compound interest formula dictates that the final amount equals the principal times 1 plus the rate over 100 raised to the power of the years. For the sum to more than treble, 1.4 to the power of n must be greater than 3. Testing n equals 3 gives 2.744, while testing n equals 4 gives 3.8416, which is greater than 3. Therefore, it takes 4 complete years.

Keep practicing — related questions