Using the rule of 72, what is the level of interest rate would I need if I want to double my money in 5 years?A.13.4%B.10.4%C.14.4%D.12.4%
Question
Using the rule of 72, what is the level of interest rate would I need if I want to double my money in 5 years?
A. 13.4%
B. 10.4%
C. 14.4%
D. 12.4%
Solution
The rule of 72 is a simple way to determine how long an investment will take to double given a fixed annual rate of interest. You divide 72 by the annual rate of return you receive on your investments, and that number is a rough estimate of years it will take to double your money.
Considering the question, if you want to double your money in 5 years, you would divide 72 by 5.
72 ÷ 5 = 14.4
So, you would need an interest rate of 14.4% per year to double your money in 5 years.
Therefore, the answer is C.14.4%
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