A sum of money doubles itself in 5 years at simple interest. What will be the ra

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

Options:

Correct Answer: 10%

Solution:

If the principal is P, then the amount after 5 years = P + 5 * (P * r/100) = 2P. This gives r = 20%.

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

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

Step 1: Understand that the principal amount is P.
Step 2: Know that after 5 years, the amount becomes 2P (which is double the principal).
Step 3: Use the formula for simple interest: Amount = Principal + Interest.
Step 4: The interest can be calculated as: Interest = Principal * Rate * Time / 100.
Step 5: Substitute the values into the formula: Amount = P + (P * r * 5 / 100).
Step 6: Set the equation equal to 2P: P + (P * r * 5 / 100) = 2P.
Step 7: Simplify the equation: (P * r * 5 / 100) = 2P - P, which simplifies to (P * r * 5 / 100) = P.
Step 8: Divide both sides by P (assuming P is not zero): (r * 5 / 100) = 1.
Step 9: Multiply both sides by 100: r * 5 = 100.
Step 10: Finally, divide by 5 to find r: r = 100 / 5 = 20.

Simple Interest Calculation – Understanding how to calculate simple interest and the relationship between principal, rate, time, and amount.