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Word Problem

by sukhman » Sat Oct 19, 2013 3:02 am
A certain sum triples in 3 years under compound interest at a certain rate of interest. in how many years would the sum become 9 times itself at the same rate under compound interest.
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by theCodeToGMAT » Sat Oct 19, 2013 3:12 am
3X = X (1+R/100)^3

9X = X(1+R/100)^T

9 = (1+R/100)^T

3 * 3 = (1+R/100)^T

(1+R/100)^3 * (1+R/100)^3 = (1+R/100)^T

T=6 years

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by Brent@GMATPrepNow » Sat Oct 19, 2013 7:05 am
sukhman wrote:A certain sum triples in 3 years under compound interest at a certain rate of interest. in how many years would the sum become 9 times itself at the same rate under compound interest.
Let's say that P = the original investment
If the amount triples every 3 years, we get:

Year 0: P dollars
Year 3: value = 3P dollars
Year 6: value = 9P dollars
Year 9: value = 27P dollars
Year 12: value = 81P dollars
Year 15: value = 243P dollars
etc.

So, we can see that, after 6 years, the value is 9 times the original investment.

Cheers,
Brent
Brent Hanneson - Creator of GMATPrepNow.com
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