AG Financial Limited recently advertised the following claim: Invest your money with us at 21%,compounded annually,and we guarantee to double your money sooner than you imagine.Ignoring taxes,how long would it take to double your money at a nominal rate of 21%,compounded annually? Round off to the nearest year.
A)Approximately two years
B)Approximately four years
C)Approximately six years
D)Approximately eight years

Question

Quizplus · Accepted Answer

To find out how long it takes to double the money, we need to use the Rule of 72 formula, which is:
Number of years to double = 72 / (nominal interest rate)
In this case, the nominal interest rate is 21% compounded annually, so the effective annual rate (EAR) is:

EAR = (1 + 0.21/1)^1 - 1 = 0.21

Now we can plug this into the formula:

Number of years to double = 72 / 0.21 = 342.86

Rounding it off to the nearest year gives us 4 years. Therefore, it would take approximately four years to double the money at a nominal rate of 21%, compounded annually.

AG Financial Limited Recently Advertised the Following Claim: Invest Your