The minimum time in which some amount will become double at 20% rate of compound interest?

Options

A. 3 year
B. 4 year
C. 6 year
D. 5 year

Answer

To find the minimum time in which an amount will become double at a 20% rate of compound interest, we can use the formula for compound interest. However, for this specific scenario, we can also use the Rule of 72, which provides a quick estimation.

### Step-by-Step Solution:

1. **Understand the Problem**: We need to determine how long it takes for an investment to double at a 20% annual compound interest rate.

2. **Use the Rule of 72**: The Rule of 72 states that you can estimate the number of years required to double your investment by dividing 72 by the annual interest rate.

\[ \text{Time (in years)} = \frac{72}{\text{Interest Rate}} \]

3. **Substitute the Interest Rate**: In this case, the interest rate is 20%.

\[ \text{Time} = \frac{72}{20} \]

4. **Calculate the Time**:

\[ \text{Time} = \frac{72}{20} = 3.6 \text{ years} \]

5. **Conclusion**: Therefore, the minimum time in which some amount will become double at a 20% rate of compound interest is approximately 3.6 years.