Fourteen years ago William put money in his account at First National Bank.William decides to cash in his account and is told that his money has quadrupled.According to the rule of 70,what rate of interest did Alfred earn?
A)5 percent
B)7 percent
C)10 percent
D)14 percent

Question

Quizplus · Accepted Answer

Using the rule of 70, we can calculate the approximate interest rate as follows:
70 / number of years = percentage growth rate
70 / 14 = 5
This means that William's money grew by around 5% per year. However, since we know that his money quadrupled (i.e., grew by a factor of 4), we can calculate the exact growth rate as follows:
4 = 1 + (growth rate)^14 (where "^" means "to the power of")
3 = (growth rate)^14
14th root of 3 = growth rate
Approximately, growth rate = 1.098
100 x (1.098 - 1) = 9.8
So the exact interest rate that William earned was around 9.8%, which is closest to option C) 10 percent.

Fourteen Years Ago William Put Money in His Account at First