The annual interest rate necessary for funds to double in five years is closest to:
A) 14.87%
B) 20.00%
C) 24.57%

Question

Quizplus · Accepted Answer

The rule of 72 is a simple way to estimate the number of years required to double the investment at a given annual rate of return. By dividing 72 by the annual rate of return, investors can get a rough estimate of how many years it will take for the initial investment to duplicate itself. In this case, to find the approximate interest rate needed to double an investment in 5 years, you divide 72 by the number of years (5), which gives you approximately 14.4%. The closest option provided is 14.87%.

The Annual Interest Rate Necessary for Funds to Double in Five