Ethan has $20,000 to invest today at an annual interest rate of 4%.Approximately how many years will it take before the investment grows to $40,500?

Question

Quizplus · Accepted Answer

Using the rule of 72, which is a simplified way to estimate the number of years required to double the investment at a fixed annual rate of interest, we divide 72 by the interest rate (4%) to get approximately 18 years to double the investment from $20,000 to $40,000. Since $40,500 is slightly more than double, it will take just over 18 years, but 18 is the closest estimate.

Ethan Has $20,000 to Invest Today at an Annual Interest