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A sum of money doubles itself in 5 years at simple interest. What is the rate of

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Question: A sum of money doubles itself in 5 years at simple interest. What is the rate of interest?

Options:

  1. 10%
  2. 12%
  3. 15%
  4. 20%

Correct Answer: 10%

Solution: 

If the principal is P, then at the end of 5 years, the amount is 2P. Simple Interest = Amount - Principal = 2P - P = P. Rate = (SI / (P * Time)) * 100 = (P / (P * 5)) * 100 = 20%.

A sum of money doubles itself in 5 years at simple interest. What is the rate of

Practice Questions

Q1
A sum of money doubles itself in 5 years at simple interest. What is the rate of interest?
  1. 10%
  2. 12%
  3. 15%
  4. 20%

Questions & Step-by-Step Solutions

A sum of money doubles itself in 5 years at simple interest. What is the rate of interest?
  • Step 1: Understand that the principal amount is represented as P.
  • Step 2: Know that after 5 years, the amount becomes 2P (which is double the principal).
  • Step 3: Calculate the simple interest (SI) earned in 5 years. SI = Amount - Principal = 2P - P = P.
  • Step 4: Use the formula for rate of interest: Rate = (SI / (Principal * Time)) * 100.
  • Step 5: Substitute the values into the formula: Rate = (P / (P * 5)) * 100.
  • Step 6: Simplify the equation: Rate = (1 / 5) * 100.
  • Step 7: Calculate the rate: Rate = 20%.
  • Simple Interest – Understanding how simple interest is calculated and its relationship with principal, amount, and time.
  • Doubling Principle – Recognizing that a sum of money doubling in a specific time frame can help determine the rate of interest.
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