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If a sum becomes 8 times itself in 9 years at compound interest, the rate per annum is
A25.99%
B20.00%
C33.33%
D12.50%
Answer & Solution
Correct answer: A. 25.99%
1. 8P = P(1 + r)^9, so (1 + r)^9 = 8.
2. Take 9th root: 1 + r = 8^(1/9).
3. 8^(1/9) = 2^(3/9) = 2^(1/3) approximately 1.2599.
4. r = 0.2599 = 25.99% per annum.
_Source: ICAI BoS Foundation Paper 3, Ch 4 'Math of Finance', p.9_
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