Question

A sum of money at simple interest doubles itself in 10 years. Find the rate of interest percent per annum?
a. 8%
b. 15%
c. 10%
d. 12.5%​

Answer 1

Answer:

First, you should know the equation of simple compound interest.

FV = PV(1 + i*n)

in which FV = future value, PV = present value, i = interest rate in one period, n = number of period

In this case, the period is 10 years. After 10 years, FV = 2PV

=> 2PV = PV(1 + i*n)

<=> 2 = 1+ i*n

<=> i*n = 1

<=> 10i = 1 <=> i = 0.1 = 10%

So, the interest rate here is 10%.