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Lars deposited $50 into a savings account. According to the rule of 72, what interest rate will cause his money to double in approximately 29 years?

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1 vote

Answer:

Explanation:

The answer is 2.5%

User Helene Bilbo
by
8.5k points
4 votes
The rate that will double Lars deposit of $50 in 29 years will be calculated as follows:
Suppose the account used was using compound interest. Thus to determine his future value we shall use the formula:
FV=P(1+r)^n
where:
FV is future value
p=principle
r=rate
n=periods
from the information given
FV=$100
p=$50
n=29 years
we are required to find r
thus
100=50(1+r)^29
100/50=(1+r)^29
2=(1+r)^29
2^(1/29)=1+r
1.02419=1+r
hence:
r=0.02419~2.419%
User Randyr
by
8.2k points
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