At what rate of interest (in percentage) per year will a sum of money double itself in 5 years on simple interest?

40%

20%

22%

18%

APEDIA

NTPC Graduate Tier 1

2025 • 05 Jun, 2025 • Shift-3

At what rate of interest (in percentage) per year will a sum of money double itself in 5 years on simple interest?

Correct Answer

20%

[Conceptual Foundation]: When a principal sum 'doubles itself', it means the total amount generated is equal to exactly twice the principal (A = 2P). Consequent......

💡 Analysis & Explanation

[Conceptual Foundation] ▼

When a principal sum 'doubles itself', it means the total amount generated is equal to exactly twice the principal (A = 2P). Consequently, the Simple Interest (SI) earned must be exactly equal to the initial Principal itself (SI = P).

[Formula Utilization] ▼

The standard formula for Simple Interest is SI = (P × R × T) / 100.

[Variable Substitution] ▼

Substituting our knowns into the equation: P = (P × R × 5) / 100. We can cancel 'P' from both sides of the equation because the principal is non-zero.

[Final Algebraic Resolution] ▼

This simplifies the equation to 1 = (R × 5) / 100. Rearranging to solve for R gives us R = 100 / 5, which results in 20.

Conclusion ▼

The required annual rate of interest is firmly 20%.

Choose Language

See you soon!

At what rate of interest (in percentage) per year will a sum of money double itself in 5 years on simple interest?