Some amount was deposited in the bank at 20% per annum.

| July 27, 2021 | education

Some amount was deposited in the bank at 20% per annum. How many times will the invested amount increase in 4 years if compound interest is charged?

Let’s denote by x the initial amount of money that was deposited in the bank at the beginning of the first year.

According to the condition of the problem, this money is put at 20% per annum, therefore, after one year, the amount of money in the account will be:

x + (20/100) * x = x + (2/10) * x = x + 0.2 * x = 1.2 * x.

After another year, the amount of money in the account will be:

1.2 * x + (20/100) * 1.2 * x = 1.2 * x + 0.2 * 1.2 * x = 1.2 * x + 0.24 * x = 1.44 * x.

After another year, the amount of money on the account will be:

1.44 * x + (20/100) * 1.44 * x = 1.44 * x + 0.2 * 1.44 * x = 1.44 * x + 0.288 * x = 1.728 * x.

After another year, the amount of money on the account will be:

1.728 * x + (20/100) * 1.728 * x = 1.728 * x + 0.2 * 1.728 * x = 1.728 * x + 0.3456 * x = 2.0736 * x.

Therefore, over four years, the initial amount will increase by 2.0736 * x / x = 2.0736 times.

Answer: in 4 years the amount of money will increase 2.0736 times.



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