Shortcut Trick
If a sum becomes n times in t years at compound interest, it becomes nx times in x × t years.
Given, sum becomes 3 times (31) in 4 years.
We need to find the time for the sum to become 27 times.
Since 27 = 33, the multiplier x = 3.
Time required = 3 × 4 = 12 years.
∴ The correct answer is 12 years.
Alternate Method
Given:
A sum of money at compound interest becomes 3 times in 4 years.
Let Principal = P, Rate = R%, Amount = A, Time = n years.
0 yrs
P
4 yrs
3P
8 yrs
9P
12 yrs
27P
× 3
× 3
× 3
Total Time = 4 + 4 + 4 = 12 years
Formula Used:
A = P(1 + R/100)n
Calculations:
⇒ 3P = P(1 + R/100)4
⇒ 3 = (1 + R/100)4 — (Equation 1)
Let the sum become 27 times in n years.
⇒ 27P = P(1 + R/100)n
⇒ 27 = (1 + R/100)n
⇒ 33 = (1 + R/100)n
Substitute the value of 3 from Equation 1:
⇒ [(1 + R/100)4]3 = (1 + R/100)n
⇒ (1 + R/100)12 = (1 + R/100)n
On comparing the powers of both sides:
⇒ n = 12 years
∴ The correct answer is 12 years.
Additional Information
Compound Interest Multiplier Rule
If a sum becomes x times in T years at a constant compound interest rate, it will become xn times in n × T years.
Contrast with Simple Interest (SI)
In Simple Interest, if a sum becomes 3 times in 4 years, the interest earned is 2P in 4 years. To become 27 times, the required interest is 26P. It would take (26 ÷ 2) × 4 = 52 years in SI.
Important CI Formats
For half-yearly compounding: Rate becomes R/2 and Time becomes 2T. For quarterly compounding: Rate becomes R/4 and Time becomes 4T.