If a sum of money doubles itself in 5 years at simple interest, what will be the rate of interest?
Practice Questions
1 question
Q1
If a sum of money doubles itself in 5 years at simple interest, what will be the rate of interest?
10%
12%
15%
20%
Using the formula for simple interest, we know that the interest earned is equal to the principal. Therefore, if the principal doubles in 5 years, the rate of interest can be calculated as (100 * Interest) / (Principal * Time) = (100 * Principal) / (Principal * 5) = 20%. Thus, the rate of interest is 20%.
Questions & Step-by-step Solutions
1 item
Q
Q: If a sum of money doubles itself in 5 years at simple interest, what will be the rate of interest?
Solution: Using the formula for simple interest, we know that the interest earned is equal to the principal. Therefore, if the principal doubles in 5 years, the rate of interest can be calculated as (100 * Interest) / (Principal * Time) = (100 * Principal) / (Principal * 5) = 20%. Thus, the rate of interest is 20%.
Steps: 10
Step 1: Understand that simple interest means the interest earned is calculated on the original amount (principal).
Step 2: If the sum of money doubles, it means the total amount after 5 years is twice the principal.
Step 3: Let the principal amount be P. After 5 years, the total amount will be 2P.
Step 4: The interest earned in 5 years is the total amount minus the principal, which is 2P - P = P.
Step 5: Use the formula for simple interest: Interest = Principal × Rate × Time.
Step 6: Substitute the values into the formula: P = P × Rate × 5.
Step 7: Simplify the equation: 1 = Rate × 5.
Step 8: Solve for Rate: Rate = 1 / 5.
Step 9: Convert the rate into a percentage: Rate = (1 / 5) × 100 = 20%.
Step 10: Conclude that the rate of interest is 20%.
