Question

If a bank deposit will double in value in 18 years, the rule of 72 implies that the interest rate on the deposit must equal is approximately:

a. 3 percent.
b. 4 percent
c. 6 percent
d. 8 percent

Answer 1

Answer:

b. 4 percent

Explanation:

According to the rule of 72, hte number of years required for an investment to be doubled can be obtained by dividing 72 by the interest rate (in percentage). If it takes 18 years for the investment to bouble in value, the interest rate is:

$18=\frac{72}{i}\\i=4\%$

The interest rate on the deposit is 4%.