6. As per “Rule of 72" how many
years will your money take to
double if compounded at the rate
of 6%?*
O 8 years
O 10 years
O 12 years
O 3 years
Answers
Answer:
Explanation:
The Rule of 72 is a quick, useful formula that is popularly used to estimate the number of years required to double the invested money at a given annual rate of return.
While calculators and spreadsheet programs like excel sheets have inbuilt functions to accurately calculate the precise time required to double the invested money, the Rule of 72 comes in handy for mental calculations to quickly gauge an approximate value. Alternatively, it can compute the annual rate of compounded return from an investment given how many years it will take to double the investment.
Key Takeaways
The Rule of 72 is a simplified way to estimate the doubling of an investment's value, based on a logarithmic formula.
The Rule of 72 can be applied to investments, inflation or anything that grows, such as GDP or population.
The formula is useful for understanding the effect of compound interest.
The Formula for the Rule of 72 Is
Years to Double=72Interest Ratewhere:Interest Rate=Rate of return on an investment\begin{aligned} &\text{Years to Double} = \frac{ 72 }{ \text{Interest Rate} } \\ &\textbf{where:}\\ &\text{Interest Rate} = \text{Rate of return on an investment} \\ \end{aligned}Years to Double=Interest Rate
72where;Interest Rate=Rate of return on an investment
Answer:
The Rule of 72 is a quick, useful formula that is popularly used to estimate the number of years required to double the invested money at a given annual rate of return.
While calculators and spreadsheet programs like excel sheets have inbuilt functions to accurately calculate the precise time required to double the invested money, the Rule of 72 comes in handy for mental calculations to quickly gauge an approximate value. Alternatively, it can compute the annual rate of compounded return from an investment given how many years it will take to double the investment.Key Takeaways.The Rule of 72 is a simplified way to estimate the doubling of an investment's value, based on a logarithmic formula.The Rule of 72 can be applied to investments, inflation or anything that grows, such as GDP or population. The formula is useful for understanding the effect of compound interest.The Formula for the Rule of 72 Is
Years to Double=72Interest Ratewhere:Interest Rate=Rate of return on an investment\begin{aligned} &\text{Years to Double} = \frac{ 72 }{ \text{Interest Rate} } \\ &\textbf{where:}\\ &\text{Interest Rate} = \text{Rate of return on an investment} \\ \end{aligned}Years to Double=Interest Rate
72where;Interest Rate=Rate of return on an investment
Hope it helps uh mate