Question

Felicia put $175 into a CD that pays 4% interest, compounded semiannually.

According to the rule of 72, approximately how long will it take for her money
to double?
A. 8 years
B. 16 years
C. 12 years
D. 18 years

Answer 1

D. 18 years

Step-by-step explanation:

Felicia has $175; doubling it will make it $350 ($175 x 2)

The interest per year is 4%

The applicable formula is A= P ( 1 + r)^n

where A = $350

P=$175

r=0.04

n= time ???

$350=$175 (1 +0.04)^n

350= 175(1.04)^n

350/175=1.04^n

2=1.04^n

log 2= (log 1.04)n

n= log2/ log1.04

n= 0.30102/0.017033

n= 17.70 year

n=18 years