Multiple choice

A sum invested at a certain rate of interest becomes double in 10 years at simple interest. What will be the percent return, if the sum is invested at the same rate of interest compounded annually for three years?

  1. 27.4%

  2. 29.2%

  3. 33.1%

  4. 35.1%

  5. 37.4%
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Simple interest: P becomes 2P in 10 years, so interest = P. P = P * r * 10 / 100, so r = 10%. Compound interest for 3 years: Amount = P(1 + 10/100)^3 = P(1.1)^3 = 1.331P. Return = 33.1%.

AI explanation

If a sum doubles in 10 years at simple interest, the interest earned equals the principal, meaning the annual rate is 100 divided by 10, or 10% per annum. Using the compound interest formula, the amount after 3 years is 100% multiplied by 1.1 cubed, which equals 133.1%. The percent return is therefore 33.1%.

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