The Rule of 72
A) can be used to determine the amount of time it takes to double an investment.
B) is fairly accurate for interest rates between 25 and 50 percent.
C) states that the time to double your money approximately equals 72/i, where 72 represents the years it takes to double your investment.
D) None of the above describe the Rule of 72.

Question

Quizplus · Accepted Answer

The Rule of 72 is a quick and easy way to estimate how long it will take an investment to double in value at a given interest rate. It is calculated by dividing 72 by the interest rate. For example, if the interest rate is 6%, it will take approximately 12 years to double your investment (72/6=12). Therefore, option A is correct. Option B is incorrect because the Rule of 72 is only accurate for interest rates between 1 and 20 percent. Option C is also incorrect because the formula is actually 72 divided by the interest rate, not 72 divided by i.