California Investors recently advertised the following claim: Invest your money with us at 21%,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 nominal rate of 21%,compounded annually? Round off to the nearest year.

Question

Quizplus · Accepted Answer

The rule of 72 is a quick way to estimate the time it takes for an investment to double in value. Divide 72 by the annual interest rate (in this case, 21%) to get the approximate number of years it takes to double your money.

72 / 21 = 3.43

Rounding this off to the nearest year, we get approximately four years. Therefore, choice B is the best answer.

California Investors Recently Advertised the Following Claim: Invest Your Money