Discussion
If at compound interest (compounding annually) a certain sum becomes 3 times of itself in 5 years, then in how many years it will become 27 times of itself?
Answer: A
With compound interest the amount grows by the same factor in each equal period. It becomes 3 times in 5 years, so after the next 5 years it is 3 x 3 = 9 times, and after another 5 years it is 9 x 3 = 27 times. So it takes 3 periods of 5 years, which is 15 years, option (A). The options 20, 25 and 30 years would give 81 times, 243 times and 729 times, which are more than 27 times. In general, if a sum becomes k times in n years, it becomes k to the power m times in m x n years, which here gives 3 cubed, 27, in 3 x 5 years.
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