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Get access to the detailed solutions to the previous years questions asked in IIM IPMAT exam
Let us assume the amount invested to be P, and the rate of interest to be r.
Value of the investment after 3 years will be, P (1 + r)3
Value of the investment after 5 years will be, P (1 + r)5
(1 + r)2 = 36/25
(1 + r)2 = 1.44
r = 0.2
We need to find the value of n for which 4000 (1 + r)n > 20000
(1 + r)n > 5
(1.2)n > 5
We see that,
1.28 = 4.2999
1.29 = 5.15
Hence it takes 9 years to grow to over 20,000.