ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Marissa wants to invest 4000 in a retirement fund that guarantees a return of 9% annually using simple interest. How many years and money will it take for her investment to double?
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1.1
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12
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11.1
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13
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Explanation:
Detailed explanation-1: -How the Rule of 72 Works. For example, the Rule of 72 states that $1 invested at an annual fixed interest rate of 10% would take 7.2 years ((72/10) = 7.2) to grow to $2. In reality, a 10% investment will take 7.3 years to double ((1.107.3 = 2). The Rule of 72 is reasonably accurate for low rates of return.
Detailed explanation-2: -C.I. = ? Hence the compound interest that needs to be paid after two year will be equal to Rs 205.
Detailed explanation-3: -compounded, annually at the rate of 10% p.a. for 3 years is Rs 331. Q.
Detailed explanation-4: -In contrast, if you have a 2% rate of return, your Rule of 72 calculation returns a time to double of 36 years.
There is 1 question to complete.