A sum of money at compound interest amounts to fifth-hold itself in 7 years. In how many years will it be 25 times itself?
A sum of money at compound interest amounts to fifth-hold itself in 7 years. In how many years will it be 25 times itself?
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Let’s denote the principal amount as \(P\), the rate of compound interest as \(r\), and the number of years as \(n\).
According to the given information, the amount becomes fivefold in 7 years. Therefore, we can write the compound interest formula as follows:
\[ A = P(1 + r)^n \]
For the amount to be fivefold:
\[ 5P = P(1 + r)^7 \]
Simplifying:
\[ (1 + r)^7 = 5 \]
Now, we need to find in how many years the amount will be 25 times itself. We can set up a similar equation:
\[ 25P = P(1 + r)^n \]
\[ (1 + r)^n = 25 \]
We know that \((1 + r)^7 = 5\), so we can express 25 in terms of 5:
\[ (1 + r)^n = 5^2 \]
\[ (1 + r)^n = ((1 + r)^7)^2 \]
\[ (1 + r)^n = (1 + r)^{14} \]
Thus, we can see that \(n = 14\).
Therefore, it will take 14 years for the sum of money to become 25 times itself at the same rate of compound interest.