An investment increases at a rate of 25% each year, how many
times will it increase in 5 years?
Answers
Given : An investment increases at a rate of 25% each year,
To Find : how many times will it increase in 5 years
Solution:
Let say investment = P
Rate of increase R = 25 % annual
Time n = 5 years
Amount after 5 years = A
A = P( 1 + R/100)ⁿ
=> A = P ( 1 + 25/100)⁵
=> A = P ( 1.25)⁵
=> A = P(5/4)⁵
=> A = P (3125/1024)
Amount increased to 3125/1024 = 3.05 times
or A - P = P (3125/1024) - P = P (2101/1024) = 2.05
Amount increased by 2.05 times
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