ECONOMICS
SAVING AND INVESTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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$3
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$6
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$9
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$12
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Detailed explanation-1: -Solution: We use the present value formula, where A is $20, 000, r is 6% or 0.06, n is 12, and t is 5 years. Approximately $14, 827.45 should be invested today in order to accumulate to $20, 000 in five years.
Detailed explanation-2: -The future value of $10, 000 with 6 % interest after 5 years at simple interest will be $ 13, 000.
Detailed explanation-3: -To use the Rule of 72 in order to determine the approximate length of time it will take for your money to double, simply divide 72 by the annual interest rate. For example, if the interest rate earned is 6%, it will take 12 years (72 divided by 6) for your money to double.
Detailed explanation-4: -The formula is: Time = 72/r, where r is the rate of interest. The rule of 72 says that it will take about 12 years for an investment to double. The Rule of 72 applies to compounded interest rates and is reasonably accurate for interest rates between 6% and 10%.