The solution to this problem requires time value of money calculations. Reference to Tables 9-1 through 9-4 in the text is necessary to complete the calculations. Approximately how many years will it take for a sum invested at 8% with annual compounding to quadruple?
A) 81 years
B) 9 years
C) 18 years
D) 17 years

Question

Quizplus · Accepted Answer

To quadruple an investment at 8% interest with annual compounding, you can use the Rule of 72, which estimates the doubling time by dividing 72 by the interest rate. Doubling time is approximately 9 years (72/8), so quadrupling would take about 18 years (9 years to double, then another 9 years to double again).

The Solution to This Problem Requires Time Value of Money