Answer
$12.25\%.$
Work Step by Step
According to the Compound Interest Formula, where $P$ is the principal, the amount deposited, $r$ is the annual interest rate, $n$ is the number of times the interest is compounded annually, $t$ is the number of years, $A$ is the amount the loaner gets back after $t$ years:
$A=P\cdot(1+\frac{r}{n})^{n\cdot t}.$
The investment is compounded annualy, hence $n=1$.
Thus, the formula above becomes:
$A=P\cdot(1+\frac{r}{1})^{1\cdot t}\\ A=P\cdot(1+r)^{t}.$
The given situation has
$t=6$ years
$A=2P$ because the investment doubles after $6$ years.
Using the formula above gives: $2\cdot P=P\cdot(1+r)^6\\2=(1+r)^6.\\\sqrt[6] {2}=\sqrt[6] {(1+r)^6}\\\sqrt[6] 2=1+r\\r=\sqrt[6] 2-1$.
Use a calculator to obtain:
$r=\sqrt[6] 2-1\\r=1.122462-1\\r=0.122462\\r\approx12.25\%.$
