In a bank , principal increases continuously at the rate of 5% per year . In how many years Rs 1000 double itself
In a bank , principal increases continuously at the rate of 5% per year . In how many years Rs 1000 double itself
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Verified answer
The problem appears to be that of compound interest.A = P (1 + r/100)^n
A = Amount of n years, P = principal, r= rate of interest
2P= P (1 + 5/100)^n
2 = 1.05^n
Log 2 = n * Log 1.05
n = 14.2 years
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For the case of simple interest:
interest = P * r* n/100
For doubling principal, interest = principal
So r*n = 100 => n = 100/5 = 20 years