Question

3.a. According to the Rule of 72, how long will it take $1,000 to double if the interest rate is 8%?

3.b. How long will it take the $1,000 to grow to $16,000? Rule of 72

4.a. What is the value ten years hence of $1,000 invested today at 8% interest, $2,000 invested at the end of year five, and $3,000 invested at the end of year eight?

Answer 1

NOTE: All the amount are in $. 3.a Accounding to Rule 72, Fout an amount to double it will take = 72 yeau Interet Rate So, your $1,000 il will take = 72 = 9 years But Actual ycare = 9.006 ycau. 3.6 Four $1,000 to grow to $ 16,000 Cic; 4 times, it will tanc = 72 x 4 = 72 x 4 = 36 yeau Incerest rate But Actual yoou = 9.006 RH - 36.024 ycare & 11000 4.0 $2,000 $3,000 lyr 2yr syr yr syr byr Tyr syr ayr love Value Ten yeau hence it. $1.000 meted now. $2.000 inverted at the end of 5th your $3,000 mveiled at the end of 8th year Fivut, Let us find the pucrent value of all the golwe Invat monte, Puerent Value - fulure Value on whneye ir - Intercel Rato na No. of years, * Peant Value of 0 $1,000 = 1.000 (+0.000 - 1000 2) $2.000 = 2,000 1 = 1,361 C Rounded) (1+0.08) 33.000 3.000 mchange = 1,621 C Rounded) Value of the Dueront Veluw after 10 yeare , future Value - Puerent Value City) Fulun Vawe of 1,000 = 4000 CH0.080 $2,158.92 3) 7.361 1861 CI+ 0.08 ) = $2,938.30 - 1,621 * CI+0.08)" = $3,499.61