A real return of 10 percent per year means that a $10,000 investment will grow to $20,000 in:
A) 10 years.
B) 7 years.
C) 15 years.
D) 20 years.

Question

Quizplus · Accepted Answer

The rule of 72 can be used to estimate how long it takes for an investment to double given a certain rate of return. By dividing 72 by the 10 percent rate of return, we get 7.2. This means that it would take approximately 7 years for the investment to double from $10,000 to $20,000. Therefore, the correct answer is choice B.

A Real Return of 10 Percent Per Year Means That