A sum doubles in 5 years at simple interest. What is the annual rate?
Correct answer: C. 20 per cent
- A. 10 per cent
- B. 15 per cent
- C. 20 per cent
- D. 25 per cent
Explanation
Doubling means the interest earned equals the principal, so 100 per cent is earned over 5 years, which is 20 per cent each year. Under compound interest the same doubling would need a lower rate, since interest earns interest. Simple interest is always calculated on the original principal alone.
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