At an annual inflation rate of 5.5%, how long will it take the Consumer Price Index (CPI) to double?
A) 12.63 year(s)
B) 12.95 year(s)
C) 12.78 year(s)
D) 12.69 year(s)

Question

Quizplus · Accepted Answer

The rule of 72 is a quick way to estimate the time it will take for an investment to double in value, given a fixed annual rate of interest. To apply the rule of 72 to inflation, we can divide 72 by the annual inflation rate. In this case, 72/5.5 = 13.09 years. Therefore, it would take approximately 13.09 years for the CPI to double. Since none of the choices are exactly 13.09, we choose the closest one, which is B, 12.95 year(s).

At an Annual Inflation Rate of 5