An amount is said to double in 5 years with compound interest. How many years will it take for the amount to grow to 8 times its original value?
Show answer & explanation
Correct answer: C
Explanation
The sum doubles in 5 years.
A = P(1 + r)ᵀ
(1 + r)⁵ = 2
Now, to become 8 times:
(1 + r)ᵀ = 8
8 = 2³
(1 + r)¹⁵ = 2³
(1 + r)⁵ = 2
T = 3 × 5 = 15 years