Question

A sum of money doubles itself after 5 years what should be the rate of interest per annum (ASAP)

Answer 1

Answer:

Use the equation: S = P(1+i)^t where:

S is the total Sum of money after the 5 years (or however long)

P is the Principal (original) amount of money invested

i is the annual interest rate

t is the number of years

Now rearrange in terms of i:

i = (S/P)^(1/t) - 1

You can plug in any values for S and P as long as S is double of P, and plug in 5 for t:

i = (2/1)^(1/5) - 1

= 1.1487 - 1

= 0.1487

So the annual interest rate is 14.87%

This assumes that interest is added once a year. If, for example, the 14.87% is divided by 12 and that percentage added 12 times in the year, the final value will more than double because you will get a compound interest effect.