ECONOMICS
SAVING AND INVESTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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72 DIVIDED BY Interest rate
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72 DIVIDED by Years to double a sum of money = the Interest rate
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Interest rate DIVIDED BY 72 = YEARS TO DOUBLE A SUM OF MONEY
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None of the above
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Detailed explanation-1: -To get the exact doubling time, you’d need to do the entire calculation. As you can see, this result is very close to the approximate value obtained by (72 / 8) = 9 years.
Detailed explanation-2: -The Rule of 72 is a calculation that estimates the number of years it takes to double your money at a specified rate of return. If, for example, your account earns 4 percent, divide 72 by 4 to get the number of years it will take for your money to double. In this case, 18 years.
Detailed explanation-3: -Do you know the Rule of 72? It’s an easy way to calculate just how long it’s going to take for your money to double. Just take the number 72 and divide it by the interest rate you hope to earn. That number gives you the approximate number of years it will take for your investment to double.
Detailed explanation-4: -In finance, the rule of 72, the rule of 70 and the rule of 69.3 are methods for estimating an investment’s doubling time. The rule number (e.g., 72) is divided by the interest percentage per period (usually years) to obtain the approximate number of periods required for doubling.
Detailed explanation-5: -The Rule of 72 is a way to estimate how long it will take for an investment to double at a given interest rate, assuming a fixed annual rate of interest. You simply take 72 and divide it by the interest rate number. So, if the interest rate is 6%, you would divide 72 by 6 to get 12.