The "rule of 72" states that invested money doubles in value if the product of the interest rate (in percentage form) and time invested (in years) equals 72. Assuming continuous compounding, what exactly must the product be for money to double?
A) 69
B) 71
C) 73
D) 75

Question

The "rule of 72" states that invested money doubles in value if the product of the interest rate (in percentage form) and time invested (in years) equals 72. Assuming continuous compounding, what exactly must the product be for money to double? 
A) 69
B) 71
C) 73
D) 75

Quizplus · Accepted Answer

The rule of 72 states that the product of interest rate and time invested equals 72 for money to double. Therefore, if we assume continuous compounding, the product must be slightly lower than 72, which is approximately 69. Therefore, the best choice is A.

The "Rule of 72" States That Invested Money Doubles in Value