Home » mcq » Commerce » Banking and financial institutions » (CSAT-Aptirudeat) 8% annual compound interest rate, a Government savings certificate doubles the invested money in approximate 9 years. If finance minister wants to get the money doubled in only 4 years, by approximately what percentage he should increase this scheme’s interest rate from its present rate?
45%
125%
225%
None of above
Answer is Right!
Answer is Wrong!
The correct answer is A. 45%.
To double the money in 9 years, the interest rate needs to be 8%. To double the money in 4 years, the interest rate needs to be 16%. This is an increase of 8%.
To calculate the interest rate, we can use the following formula:
$A = P(1 + r/n)^nt$
where:
- $A$ is the final amount
- $P$ is the principal amount
- $r$ is the interest rate
- $n$ is 0 213.4-11.5c23.5-6.3 42-24.2 48.3-47.8 11.4-42.9 11.4-132.3 11.4-132.3s0-89.4-11.4-132.3zm-317.5 213.5V175.2l142.7 81.2-142.7 81.2z"/> Subscribe on YouTube
the number of times the interest is compounded per year
$t$ is the number of yearsIn this case, we know that $P = 1$, $A = 2$, $t = 9$, and $n = 1$. We can solve for $r$ to get:
$r = \frac{ln(2)}{9}$
$r \approx 8\%$
To double the money in 4 years, we can solve for $r$ in the following equation:
$A = P(1 + r/n)^nt$
where:
- $A = 2$
- $P = 1$
- $t = 4$
- $n = 1$
$r = \frac{ln(2)}{4}$
$r \approx 16\%$
This is an increase of 8% from the current interest rate of 8%.