Consider the following statements:
If a sum of money is lent at simple interest, then
(A) money gets doubled in 5 years if the rate of interest is 16⅔%.
(B) money gets doubled in 5 years if the rate of interest is 20%.
(C) money becomes four times in 10 years if it gets doubled in 5 years.
of these statements,
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (B) only
For money to double under simple interest the interest must equal the principal, so R × T = 100. With T = 5 that needs a rate of 20% per annum — statement (B) is correct and (A), which gives 16⅔%, is wrong.
(C) is also wrong. Under simple interest the same amount is added each year, so in 10 years the interest is twice the principal and the money becomes three times, not four; quadrupling in 10 years would need compound interest.