Question:
Find the rate at which a sum of money will double itself in 3 years, if the interest is compounded annually.
Solution:
Let the rate percent per annum be $R$.
Then,
$\mathrm{A}=\mathrm{P}\left(1+\frac{\mathrm{R}}{100}\right)^{\mathrm{n}}$
$2 \mathrm{P}=\mathrm{P}\left(1+\frac{\mathrm{R}}{100}\right)^{3}$
$\left(1+\frac{\mathrm{R}}{100}\right)^{3}=2$
$\left(1+\frac{\mathrm{R}}{100}\right)=1.2599$
$\frac{\mathrm{R}}{100}=0.2599$
$\mathrm{R}=25.99$
Thus, the required rate is $25.99 \%$ per annum.