Question

An investment increases at a rate of 25% each year, how many times will increase in 5 years? Select one: a. (0.25) 5e b. (1.25) C. (1.5) 5 d. 55 ​

Answer 1

Answer

1.25

Explaination

if you will increase 25 by itself for 5 years the answer will be 1.25

Answer 2

The increase in the rate of investment after 5 years is 1.5, and option 'C' is correct.

Given:-

Rate of investment = 25%

To Find:-

The increase in the rate of investment after 5 years.

Solution:-

We can easily find out the increase in the rate of investment after 5 years by using these simple steps.

As

Rate of investment (r) = 25%

time (t) = 5 years

Here, the principal amount is not given in the question so, we will take the principal amount to be 100Rs.

So, p = Rs. 100

r = 25%

Time = 5 years

And, we also know that according to the formula of compound interest,

$CI = p {(1 + \frac{r}{100} )}^{t}$

on putting the values we get,

$CI = 100( {1 + \frac{25}{100}) }^{5}$

$CI = 100 \times {(1 + 0.25)}^{5}$

$CI = 100 \times {1.25}^{5}$

$CI = 100 \times 3.05$

$CI = 305$

So, the amount is increased by 1.5 times.

Hence, The increase in the rate of investment after 5 years is 1.5, and option 'C' is correct.

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