Multiple choice

The integral number of years in which a sum of money at 25% p.a. under compound interest will become more than twice itself, is at least.

  1. 3

  2. 2

  3. 4

  4. 1
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C Correct answer
Explanation

We need (1 + 25/100)^n > 2, which is (1.25)^n > 2. For n=1, 1.25. For n=2, 1.5625. For n=3, 1.953125. For n=4, 2.4414. Thus, at least 4 years are required.

AI explanation

Using the compound interest formula, the amount becomes P multiplied by 1.25 raised to the time in years. For 3 years, the amount is 1.953125 times P, which is less than twice the principal. For 4 years, the amount is 2.4414 times P, which is more than twice itself. Therefore, the sum requires at least 4 years to more than double.

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