A sum of money doubles itself in 5 years at simple interest. What is the rate of interest?
Practice Questions
1 question
Q1
A sum of money doubles itself in 5 years at simple interest. What is the rate of interest?
10%
12%
15%
20%
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%.
Questions & Step-by-step Solutions
1 item
Q
Q: A sum of money doubles itself in 5 years at simple interest. What is the rate of interest?
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%.
Steps: 7
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.
