Question : A sum of money becomes double in 3 years at compound interest compounded annually. At the same rate, in how many years will it become four times of itself?
Option 1: 4 years
Option 2: 6 years
Option 3: 6.4 years
Option 4: 7.5 years
Correct Answer: 6 years
Solution :
Given: A sum of money becomes double in 3 years at compound interest compounded annually.
If $P$ becomes $xP$ in $n$ years then $P$ becomes $x^kP$ in $kn$ years when interest is compounded annually.
Let the sum be P.
After 3 years, P becomes 2P.
Then P becomes 2
2
P in 2 × 3 = 6 years.
Hence, the correct answer is 6 years.
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