A sum of money placed at compound interest doubles itself in 4 years. In how many years will it become 8 times its initial value at the same interest rate?
Answer and explanation
Correct answer: C. 12 years
- Step 1: Recall the exponential property of compound interest: If an amount doubles in years, it multiplies by in years.
- Step 2: Here, the target multiplier is . Hence, . The time required is .
Answer
12 years.
Why not the others: '8 years' quadruples the amount (); '10 years' assumes simple interest linearity; '16 years' computes times.
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