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Tea costs $1 per pack and coffee costs $5 per pack. If the price of tea rises at 20% a month, and the price of coffeeis...

Tea costs $1 per pack and coffee costs $5 per pack. If the price of tea rises at 20% a month, and the price of coffeeis unchanged, how many months will it take before a pack of tea costs more than a pack of coffee ?

A

10

B

8

C

9

D

5

E

4

A

10

B

8

C

9

D

5

E

4

Solution

The price of the Tea is $1 per pack and its price rises 20% a month, hence it is compounded monthly.Let after ‘n’ months...

The price of the Tea is $1 per pack and its price rises 20% a month, hence it is compounded monthly.
Let after ‘n’ months the price of the tea is greater than that of coffee that is $5 per pack.
(1 + 20/100)n > 5
(1.2)n > 5
And (1.2)9 = 5.6
Hence, after 9 years the cost of the tea will be greater than that of coffee.

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