A sum of money doubles in 5 years at simple interest. Find the rate of interest.
1. 20%
2. 10%
3. 15%
4. 25%
1. 20%
2. 10%
3. 15%
4. 25%
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Correct Answer – Option 1 : 20%
Given
Amount = 2(principal)
Formula
Simple interest = (p × r × t)/100
Where p, r and t represents principal, rate of interest and time
Calculation
Simple interest = Amount – Principal
⇒ Rs. 2P – P
⇒ P
⇒ P = ( P × r × 5)/100
⇒ r = 20 %
Alternative method
If a sum of money becomes ‘a’ times in ‘t’ years at simple interest, then formula for calculating rate of interest will be as follows:
Rate of interest = 100(a – 1)/t
Solution:
a= 2, t = 5
Rate of interest = 100(2 – 1)/5
⇒ 20 %