in how many years will a sum of mony become double at 5% per annum
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in how many years will a sum of mony become double at 5% per annum
want full solution
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When we replace r with 0.05 (5%), we find t=14.2067, which means that applying an interest rate of 5% per year, the initial amount will double in 14.2067 years, or 14 years and almost 2 and a half months (2.48 to be exact).
Answer:
Let Principal be P. Rate of interest = 5%
Assuming Simple Interest,
SI = P {since the money doubles}
P X T X 5/100 = P
T = 100/5 = 20 years
Assuming annually compounded interest ,
P (1+5/100)T = 2P
(1.05)T = 2
T is between 14 to 15 years.
If T = 14 years, the principal is a bit less than double, hence approximately T = 15 years.