Determine the doubling time of the investment.
-7% APR compounded semiannually
A) 10.07 years
B) 8.06 years
C) 20.15 years
D) 15.11 years

Question

Quizplus · Accepted Answer

The doubling time of an investment can be calculated using the Rule of 72, which is an easy way to estimate the number of years required to double the invested money at a given annual rate of return. The formula is: Time = 72 / Interest Rate. Since the interest is compounded semiannually, we use the effective annual rate (EAR) for the calculation. However, for a quick approximation, we can directly apply the nominal rate to the Rule of 72. Thus, Time = 72 / 7 = 10.29 years. The closest option to this calculation is 10.07 years.

Determine the Doubling Time of the Investment