Question

At what rate of interest will an amount be doubled in two years, when compounded annually?
1. 21.32%
2. 41.4%
3. 31.4%
4. 23.23%

Answer 1

Correct Answer - Option 2 : 41.4%

Concept:

Compound interest = P × [(1 + R/100)ⁿ - 1]

Calculation:

⇒ Let the rate of interest be R.

⇒ The amount gets doubled in two years

⇒ P × (1 + R/100)² = 2P

⇒ 1 + R/100 = √2

⇒ R = 41.4%

∴ The required result will be 41.4%.