Multiple choice

Approximately what annual compound interest rate is needed for a sum of money to triple in 2 years?

  1. 37.5%

  2. 42.5%

  3. 73.2%

  4. 62.5%

  5. 82.3%
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

For a sum to triple, the amount becomes 3P. Using the compound interest formula A = P(1 + r/100)^n, we have 3 = (1 + r/100)^2. Taking the square root of 3 gives approximately 1.732, so 1 + r/100 = 1.732, which means r = 73.2%.

AI explanation

Using the compound interest formula A = P(1 + R/100)^T, tripling the principal means the amount is 3P, giving the equation 3P = P(1 + R/100)^2. Dividing by P leaves 3 = (1 + R/100)^2, so taking the square root of both sides results in 1.732 = 1 + R/100. Solving for R gives 0.732 = R/100, which means the required rate is approximately 73.2%.

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