Question

At simple interest a sum of money is double in 20 years. What is the rate of interest?

• A. 20
• B. 4
• C. 5
• D. 10

Answer 1

The correct option is C 5

For simple interest, the interest earned is determined by the formula: I = PRT

where I=interest, R=rate, T=time, P=principle

The rate where the interest equals the principle in 20 years. i.e., the amount doubles.

So we know, I=P and T=20 years

so we can solve for R

R=$\frac{I}{\left(P\right)\left(T\right)}$=$\frac{I}{P}\times \frac{1}{20}$=$1\times \frac{1}{20}$=0.05 per year or 5% per year interest.