JIPMAT 2021 (QA) - A certain sum is lent at a certain rate of compound interest. It grows to 1.44 times its value in 2 years. If the same sum is lent at simple interest at the same rate, in how many years would it double itself? | PYQs + Solutions

JIPMAT 2021

Arithmetic

Simple & Compound Interest

Conceptual

A certain sum is lent at a certain rate of compound interest. It grows to 1.44 times its value in 2 years. If the same sum is lent at simple interest at the same rate, in how many years would it double itself?

3 years

4 years

5 years

6 years

Correct Option: 3

1) Let's say rate = r%

\newline

For compound interest in 2 years:

\newline

P(1 + \frac{r}{100})^2 = 1.44P

(1 + \frac{r}{100})^2 = 1.44

1 + \frac{r}{100} = 1.2

r = 20\%

2) Now for simple interest to double:

\newline

P(1 + \frac{20t}{100}) = 2P

Where t is time in years

1 + \frac{20t}{100} = 2

\frac{20t}{100} = 1

t = 5

Therefore, at simple interest, the sum will double in 5 years.