Question

A financial analyst tells you that investing in stocks will allow you to double your money in 7 years. What annual rate of return is the analyst assuming you can earn

Answer 1

Answer:

10.4%

Explanation:

there are two ways that you can calculate this:

using the rule of 70, the annual interest rate = 70 / 7 = 10%

or

we can calculate it

2 = 1 x (1 + i)⁷

⁷√2 = ⁷√(1 + i)

1.104 = 1 + i

i = 0.104

i = 10.4%

the second way is more exact, so we should choose it