Question
An initial investment grows to four times its original amount in 6 years under compound interest. How many years will it take for the investment to grow to 16 times its original amount under the same conditions?
Solution
Let the amount invested be Rs. 'P' and rate of interest is 'R%' p.a.
Amount = Principal X [(1 + (R/100) ]time
So, 4P = P X [1 + (R/100) ]6
Or, [1 + (R/100) ]6 = 4
On squaring both sides,
We get, [1 + (R/100) ]12 = 16
Therefore, required time = 12 years
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