Compound Interest Practice Test Set 1

The amount doubles in 7 years, so it becomes 2 times the principal in each 7-year growth period.

The target is 16 times the principal. Since 16 = 2⁴, four doubling periods are required.

The amount doubles every 15 years. We need the amount to become 2,048 times the principal.

Express 2,048 as a power of 2: 2,048 = 2¹¹. Thus, 11 doubling periods are required.

In 15 years, the amount becomes 27 times the principal. Since 27 = 3³, the growth factor over each 5-year period is 3.

The required period is 25 years, which contains five 5-year periods.

Use the compound amount relation A/P = (1 + R/100)² because the investment runs for 2 years.

Given $A/P = 16$. Therefore, 1 + R/100 = √16 = 4.

For 2 years, A/P = (1 + R/100)². The given amount is 3.24 times the principal.

The annual growth factor is √3.24 = 1.8.