What is the least number of complete years in which a sum of money

Interests

What is the least number of complete years in which a sum of money at 20% compound interest will be more than doubled?

  1. 4
  2. 5
  3. 6
  4. 7

Answer

If principal amount be P, then we need to find n for the following equation

P(1 + 0.2)n > 2P

(1.2)n > 2

n(log 1.2) > n log 2 (log means log to the base e i.e natural log)

n > (log 2 / log 1.2) > 3.8

So, Complete years = 4

The correct option is A.