Question

Using the Rule of 72, determine how long it will take for Maria to double her money if she invests and earns the following returns: 1.44%,7.20%, and 6.40% years 1,44% years 7.20% years 6.40%

Answer 1

The Rule of 72 is an approximate way to find out the time taken for an investment to double given a fixed annual rate of interest. By dividing 72 by the annual rate of return, we get an approximate estimate of how many years it will take for the initial investment to duplicate itself.

1) 1.44%

N = 72/1.44 = 50 years

2) 7.20%

N = 72/7.20 = 10 years

1) 6.40%

N = 72/6.40 = 11.25 years