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Assume you put $2,000 into a tax-free investment and leave it there for 45 years at an annual rate of 8%. According to the Rule of 72, your investment will grow to a value of almost $64,000.

Question

Quizplus · Accepted Answer

The Rule of 72 formula estimates the number of years it takes for an investment to double based on the annual rate of return. By dividing 72 by the annual rate of return, you can estimate how many years it takes for the investment to double. In this case, 72 divided by 8 is 9, so the investment would double every 9 years. After 45 years, the investment would double 5 times (45 years / 9 years per doubling), resulting in a value of approximately $64,000 (the original $2,000 multiplied by 2, 5 times). Therefore, the statement is true.

I Assume You Put $2,000 into a Tax-Free Investment and Leave