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

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

Options:

Correct Answer: 10%

Solution:

If the sum doubles, then the interest earned is equal to the principal. Rate = (Principal/Time) * 100 = (Principal/5) * 100 = 20%

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

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

Step 1: Understand that if a sum of money doubles, the interest earned is equal to the original amount (Principal).
Step 2: Let the Principal amount be P. If it doubles, the total amount after 5 years is 2P.
Step 3: The interest earned in 5 years is the total amount (2P) minus the Principal (P), which equals P.
Step 4: Use the formula for simple interest: Interest = Principal × Rate × Time.
Step 5: Substitute the values: P = P × Rate × 5.
Step 6: Divide both sides by P (assuming P is not zero): 1 = Rate × 5.
Step 7: Solve for Rate: Rate = 1/5.
Step 8: Convert the rate to a percentage: Rate = (1/5) × 100 = 20%.

Simple Interest – Understanding how simple interest is calculated and how it relates to the principal and time.
Doubling of Principal – Recognizing that if a sum doubles, the interest earned equals the principal.
Rate of Interest Calculation – Applying the formula for rate of interest in the context of simple interest.