TANCET, XAT Math sample questions, answers. Compound Interest : TANCET MBA Entrance Study Material

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TANCET - XAT Math Question : Compound Interest

The question given below is a sample practice problem in Compound Interest. It is an Arithmetic Topic and the problem provides an understanding of finding the number of years it takes a sum of money to double if invested in compound interest.

Question

Rs.100 doubled in 5 years when compounded annually. How many more years will it take to get another Rs.200 compound interest?
1. 10 years
2. 5 years
3. 7.5 years
4. 15 years
5. 8 years
Correct Answer - 5 years. Choice (2)

Rs.100 invested in compound interest becomes Rs.200 in 5 years.

The amount will double again in another 5 years.

i.e., the amount will become Rs.400 in another 5 years.

So, to earn another Rs.200 interest, it will take another 5 years.