Suppose Botswana doubles its income in 6 years while South Africa doubles its income in 9 years. According to the rule of 72, the growth rate in Botswana is:
A)3 percentage points higher than the growth rate in South Africa.
B)4 percentage points higher than the growth rate in South Africa.
C)8 percentage points higher than the growth rate in South Africa.
D)12 percentage points higher than the growth rate in South Africa.

Question

Quizplus · Accepted Answer

The rule of 72 is a simple formula used to estimate the number of years required to double the investment at a given annual rate of return. By dividing 72 by the number of years it takes to double the investment, you can find the approximate annual growth rate. For Botswana, the growth rate is 72 / 6 = 12% per year. For South Africa, it's 72 / 9 = 8% per year. Therefore, the growth rate in Botswana is 4 percentage points higher than in South Africa.

Suppose Botswana Doubles Its Income in 6 Years While South