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In what duration will a sum of money double itself at 10% per annum rate of simple interest?
10 years
8 years
12 years
5 years
10 years
For simple interest, time T required to double a sum is given directly by the formula T=R100тАЛ, where R is the rate percentage. Thus, T=10100тАЛ=10 years.
Principal amount P = P, Total Amount A = 2P (doubles itself), Rate R = 10% per annum, Simple Interest SI = P
T=P├ЧR100├ЧSIтАЛ
For simple interest, time T required to double a sum is given directly by the formula T=R100тАЛ, where R is the rate percentage. Thus, T=10100тАЛ=10 years.
Confusing simple interest with compound interest and incorrectly applying the compound interest formula (1+r/100)t=2.
Step 1: Understand the Condition for Doubling
When a sum of money doubles itself, the final amount A becomes twice the principal P. Therefore, the Simple Interest (SI) earned is equal to the principal itself.
SI=AтИТP=2PтИТP=P
Step 2: Apply the Simple Interest Formula
The formula for Simple Interest is SI=100P├ЧR├ЧTтАЛ. Rearranging this formula to solve for time T, we get:
T=P├ЧR100├ЧSIтАЛ
Step 3: Substitute the Given Values
Substitute SI=P and Rate R=10% into the rearranged formula:
T=P├Ч10100├ЧPтАЛ=10100тАЛ=10┬аyears
A is correct because the time required for a sum to double at 10% per annum simple interest is calculated as T=10100тАЛ=10 years.
For compound interest, the time to double a sum at a given rate is estimated using the Rule of 72, whereas under simple interest, it is calculated exactly as T=100/R.