If a sum of money doubles itself in 5 years at simple interest, what is the rate

If a sum of money doubles itself in 5 years at simple interest, what is the rate of interest per annum?

If a sum of money doubles itself in 5 years at simple interest, what is the rate of interest per annum?

Step 1: Understand that simple interest means the interest is calculated on the original amount of money (P).
Step 2: Know that if the money doubles, the final amount (A) will be 2 times the original amount (P). So, A = 2P.
Step 3: Use the formula for simple interest: A = P(1 + rt), where r is the rate of interest and t is the time in years.
Step 4: Substitute A with 2P in the formula: 2P = P(1 + r*5).
Step 5: Divide both sides of the equation by P (assuming P is not zero): 2 = 1 + r*5.
Step 6: Subtract 1 from both sides: 2 - 1 = r*5, which simplifies to 1 = r*5.
Step 7: Divide both sides by 5 to find r: r = 1/5.
Step 8: Convert r into a percentage: r = 0.2 or 20%.

Simple Interest – Understanding the formula A = P(1 + rt) and how to manipulate it to find the rate of interest.