A bank advertises that you can double the money if you invest it with them for 8 years, what is the rate of interest offered by them?

Let us assume bank follows the process of Simple Interest.

Simple Interest = Principal x Interest Rate x Number of years of deposit / 100

Let us assume Principal amount is Rs.1000 To make it double, interest earned has to be Rs.1000

By using above formula, Number of years of deposit = (100 x 1000) / (1000 x 8) = 12.5 years. Using compound interest.

Most banks calculate interests by compounding them either monthly/ quarterly/half-yearly or annually.

When amount doubles, to calculate the number of years of deposit, we may use 70/interest rate(r) rule.

70/8 = 8.75% approximately.

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