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

₹0.0

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

Options:

Correct Answer: 20%

Solution:

Rate = (100 * Principal) / (Principal * Time) = (100 * 1) / (1 * 5) = 20%

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

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

Step 1: Understand that simple interest means the interest is calculated only on the original amount of money (Principal).
Step 2: If the sum of money doubles in 5 years, it means the total amount after 5 years is twice the Principal.
Step 3: Let the Principal be represented as 'P'. After 5 years, the total amount will be '2P'.
Step 4: The formula for simple interest is: Interest = Principal × Rate × Time.
Step 5: In this case, the Interest earned in 5 years is '2P - P = P'.
Step 6: Substitute the values into the simple interest formula: P = P × Rate × 5.
Step 7: Simplify the equation: 1 = Rate × 5.
Step 8: Solve for Rate: Rate = 1 / 5.
Step 9: Convert the rate into a percentage: Rate = (1 / 5) × 100 = 20%.

Simple Interest – Understanding how simple interest is calculated and the relationship between principal, rate, and time.