A sum becomes its double in 5 years on simple interest. What is the rate of interest?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → 20%
A sum that doubles has earned interest equal to itself, so in 5 years the simple interest is 100% of the principal. Simple interest grows by the same amount every year.
Interest in 5 years \(=100\%\) of the principal
Interest in 1 year \(=100\%\div5=20\%\) of the principal
So the rate of interest is 20% per annum