An amount doubles in 7 years under compound interest. How many years will it take for the amount to grow to 16 times its original value?
Show answer & explanation
Correct answer: B
Explanation
Given:
Amount in 7 years = 2P
By the formula:
A = P(1 + r)ᵗ
In 7 years
P(1 + r)⁷ = 2P
(1 + r)⁷ = 2
16P = P(1 + r)ᵗ
(1 + r)ᵗ = 16
16 = 2⁴
And
(1 + r)⁷ = 2
(1 + r)²⁸ = 16
t = 28 years