If Ernie's annual real income rises by 8 percent each year, his annual real income will double in about:
A)8-9 years.
B)10-11 years.
C)5-6 years.
D)19-20 years.

Question

Quizplus · Accepted Answer

The Rule of 72 is a simple way to estimate how long it will take for an investment to double at a fixed annual rate of interest. By dividing 72 by the annual growth rate (8% in this case), we find that it will take approximately 9 years for Ernie's income to double.

If Ernie's Annual Real Income Rises by 8 Percent Each