Question Details

Q.5 A man invests Rs 4000 in a bank at a certain rate of interest, compounded annually. If the ratio of the value of the investment after 3 years to the value of the

investment after 5 years is 25 36 , then the minimum number of years required for the value of the investment to exceed Rs 20000 is:

Show Answer

Correct Answer :

9

Solution :

The correct answer is 9.

Step-by-step Explanation:

Let the principal amount invested be represented by P, the annual rate of compound interest be R%, and the annual multiplier be r, where:
r = 1 + R 100
Here, the initial investment P is Rs 4000.

The value of the investment after t years, denoted as A(t), is given by the formula:
A ( t ) = P r t

We are given the ratio of the value of the investment after 3 years to the value of the investment after 5 years:
A ( 3 ) A ( 5 ) = 25 36

Substituting the formula for compound interest, we get:
P r 3 P r 5 = 25 36
Simplifying the left-hand side:
1 r 2 = 25 36
Taking the reciprocal on both sides:
r 2 = 36 25
Taking the square root (since r represents a positive multiplication factor):
r = 6 5 = 1.2

Now, we want to find the minimum number of years n required for the value of the investment to exceed Rs 20000:
A ( n ) > 20000
Substitute the values of P and r:
4000 ( 1.2 ) n > 20000
Divide both sides by 4000:
( 1.2 ) n > 5

Let's calculate the powers of 1.2 step-by-step:
For n = 1: 1.21=1.2
For n = 2: 1.22=1.44
For n = 3: 1.23=1.728
For n = 4: 1.24=2.0736
For n = 5: 1.252.488
For n = 6: 1.262.986
For n = 7: 1.273.583
For n = 8: 1.284.300
For n = 9: 1.295.160

Since 1.28<5 and 1.29>5, the minimum integer value of n for which the value of the investment exceeds Rs 20000 is 9.

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