ECONOMICS
SAVING AND INVESTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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1440
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14.4
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55.5
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80
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Detailed explanation-1: -Applying the rule of 72, the number of years to double your money is 72 divided by the annual interest rate in percentage. In this question, the annual percentage rate is 5%, thus the number of years to double your money is: 72 / 5 = 14.4.
Detailed explanation-2: -Doubling Time: How long will it take money to double if it is invested at 5% compounded continuously? It will take approximately 13.86 years for the initial investment to double.
Detailed explanation-3: -Simply divide the number 72 by the annual rate of return to determine how many years it will take to double. For example, $100 with a fixed rate of return of 8% will take approximately nine (72 / 8) years to grow to $200.
Detailed explanation-4: -Hence, it will take 10 years for the sum of money to double itself with the rate of 10% per annum simple interest.