A recent advertisement in the financial section of a magazine carried the following claim: "Invest your money with us at 14 percent,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 simple rate of 14 percent,compounded annually?
A) Approximately 3.5 years
B) Approximately 5 years
C) Exactly 7 years
D) Approximately 10 years
E) Exactly 14 years

Question

Quizplus · Accepted Answer

Using the rule of 72 (where 72 divided by the interest rate equals the number of years to double your money), we get 72/14 = 5.14. Therefore, it would take approximately 5 years to double your money at a simple rate of 14 percent compounded annually.

A Recent Advertisement in the Financial Section of a Magazine