simple interest and compound interest

Question

what is the least number of complete years in which a sum of money put out at 20% compound interest will be more than double?

 

(a)1

(b)3

(c)2

(d)4

(e)5

Answer 1

at this interest rate you are looking for the number of years in which

(1 + 0.20)^t > 2

that ends up happening between Years 3 and 4

(1.20)^3 = 1.728

(1.20)^4 = 2.074

meaning that after 4 years the initial investment will have grown to more than double its original size

Answer 2

if it were simple it would be 5. $100 @20% per year is $20. 5 x $20  = 100.

 

But its compounded so the formula is (1+.20)^ X  > 2. at x =4 years it more than doubles. Compound interest produces much faster doubling times.

 

My strengths are in finance and math.