Solve this multiple-choice question and choose the correct option.

At what annual simple-interest rate will a sum of money double in 8 years?

Difficulty: Easy

12 %
12.5 %
13 %
15 %
None of these

Correct Answer: 12.5 %

Explanation:

Introduction / Context:Under simple interest, amount A = P * (1 + r * t). Doubling means A = 2P, so 1 + r * t = 2 → r * t = 1.

Given Data / Assumptions:

t = 8 years.
Simple interest model.

Concept / Approach:r = 1 / t (in decimal).

Step-by-Step Solution:r = 1 / 8 = 0.125 = 12.5% per annum.

Verification / Alternative check:Check: A = P (1 + 0.125 * 8) = P * 2 = 2P.

Why Other Options Are Wrong:12% gives 1.96P; 13% gives 2.04P; 15% gives 2.20P in 8 years.

Common Pitfalls:Applying compound-interest logic; here the model is simple interest.

Final Answer:12.5 %

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