Question

On January 1, 1970, Lois deposited $1950 into a savings account paying 6.6% interest, compounded semiannually. If she hasn't made any additional deposits or withdrawals since then, and if the interest rate has stayed the same, in what year did her balance hit $3900, according to the rule of 72? A. 1979 B. 1981 C. 1982 D. 1980

Answer 1

Th correct answer is D. 1980

Answer 2

D. 1980.

Explanation:

We have been given that on January 1, 1970, Lois deposited $1950 into a savings account paying 6.6% interest, compounded semiannually. We are asked to find the year in which Lois's balance hit $3900, according to the rule of 72.

The rule of 72 states the number of years it will take an investment to be double.

Since $3900 is twice the amount $1950, so we will divide 72 by our given interest rate to find the number of years it will take to double the given amount.

`\text{Time it will take to double the given amount}=(72)/(6.6)`

`\text{Time it will take to double the given amount}=10.909090\approx 11`

Since the amount will be double in 11th year, so 11th year after January 1, 1970 will be 1980.

Therefore, in year 1980 Lois amount will be double and option D is the correct choice.