PRC-2 · Chapter 5 · Question 2 of 50
Assuming a simple interest framework, how many years will it take for a deposited sum of money to exactly double itself if invested at an annual rate of 10%?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) 10 years
Explanation
For money to double, the interest earned must equal the principal (I = P). Therefore, P = P * (0.10) * T. Dividing both sides by P leaves 1 = 0.10 * T, meaning T = 10 years.
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