Correct Answer - Option 3 : 8 years
Given:
The principal doubles itself at 12.5% rate of interest.
Formula used:
Simple Interest(S.I) = Principal(P) × Rate(R%) × Time(T)/100
Amount(A) = P + S.I
Calculation:
According to the question,
Principal double means amount is 2P
⇒ Amount(A) = P + S.I
⇒ A = P + P
⇒ A = 2P
It means Principal = P and S.I = P
Then, T = (S.I × 100)/(P × R)
⇒ (P × 100)/(P × 12.5)
⇒ 1000/125
⇒ T = 8 years
∴ The principal doubles itself at 12.5% rate of interest in 8 years.