Assuming that the interest is compounded annually and no money is withdrawn, what interest rate would be required in order to double your savings in 12 years?
A)1.06%
B)5.95%
C)10%
D)12%
E)15%

Question

Quizplus · Accepted Answer

The rule of 72 is a simple way to estimate the number of years required to double the investment at a given annual rate of return. By dividing 72 by the annual rate of return, investors get a rough estimate of how many years it will take for the initial investment to duplicate itself. In this case, 72 divided by 12 years equals 6, which means a 6% interest rate is needed. However, since the actual formula for compound interest is more precise, the closest answer to this estimation is 5.95%.

Assuming That the Interest Is Compounded Annually and No Money