A $5,000 investment has doubled to $10,000 in ten years. How much longer will it take for the investment to reach $15,000 if it continues to earn the same rate?
A) 5.00 years
B) 5.85 years
C) 6.86 years
D) 7.20 years

Question

Quizplus · Accepted Answer

The investment doubled ($5,000 to $10,000) in 10 years, indicating a 100% growth over this period. To find the annual growth rate, we can use the rule of 72, which estimates the number of years required to double an investment at a given annual rate. The formula is 72 / annual rate = years to double. Here, we have 72 / 10 = 7.2% as the approximate annual growth rate. To grow from $10,000 to $15,000 (a 50% increase) at a 7.2% annual rate, we can use the rule of 72 in reverse or directly calculate the time it takes for a 50% growth. Direct calculation or approximation methods show it takes slightly less than 6 years, making 5.85 years the closest and correct choice.

A $5,000 Investment Has Doubled to $10,000 in Ten Years