Question

According to the rule of 72, which statement is true? An investment of $3,100 will double in 12 years at a compound interest rate of 5%. An investment of $9,000 will double in 10 years at a compound interest rate of 7%. An investment of $4,500 will double in 8 years at a compound interest rate of 9%. An investment of $3,000 will double in 4 years at a compound interest rate of 12%

Answer 1

Hey!

Question - According to the rule of 72, which statement is true? An investment of $3,100 will double in 12 years at a compound interest rate of 5%. An investment of $9,000 will double in 10 years at a compound interest rate of 7%. An investment of $4,500 will double in 8 years at a compound interest rate of 9%. An investment of $3,000 will double in 4 years at a compound interest rate of 12%

Answer - An investment of $3,000 will double in 4 years at a compound interest rate of 12%

0.012 / 3000 = 0.00004 = 4

Answer 2

Statement 3 is true

Explanation:

By using rule of 72, we can simply determine how long an investment will take to double.

By using the formula :
`(72)/(r)` ( r = rate of interest )

There are 4 statements, by using rule of 72 we find out which statement is true.

Statement (1):

Investment of $3,100 will double in 12 years at a compound interest rate of 5%.

We use the formula
`(72)/(r)` =
`(72)/(5)` = 14.4 years

It will take 14.4 years to double. This statement is not true.

Statement (2):

Investment of $9000 will double in 10 years at a compound interest rate of 7%.

`(72)/(7)` = 10.28 years

It will take 10.28 years, so this statement is not true.

Statement (3):

Investment of $4,500 will double in 8 years at a compound interest rate of 9%.

`(72)/(9)` = 8 years

It will take 8 years to double. This statement is true.

Statement (4):

Investment of $3,000 will double in 4 years at a compound interest rate of 12%

`(72)/(12)` = 6 years

It will take 6 years to double, so this statement is not true.

Therefore, Statement 3 is true.