Question

If Rs. 1000 is deposited in bank and you are given two options to choose from (a and b). Your ultimate goal is to double your money as fast as possible – which method you will choose and how much time would be required to double your money with the selected method? Simple interest at 10% Compound Interest at 10% (Annual Compounding)

Answer 1

Answer: I'll choose compound interest because I could double the money in 7.27 years by compund interest

Step-by-step explanation:

Given, Rate of interest is 10%, amount is 1000 rs

Let, required time is t years

Then in 1st case, 2×1000 = 1000 + (1000×(10/100)×t)

, t = 1000/100 = 10 years

In 2nd case, 2×1000 = 1000× (1+10/100)^t

, (1.1)^t = 2

, t = ln 2 /ln (1.1) = 7.27 years