Question

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

A 0.6%
B 1.7%
C 2.5%
D 0.4%

Answer 1

2.5% --APEX

Explanation:

Answer 2

Answer: C 2.5%

Explanation:

The "Rule of 72" is a easy way to calculate how much time an investment will take to double with a given fixed annual rate of interest.

Just we have to divide 72 by the annual rate of return(r), we can get a rough estimate of how many years it will take to double the initial investment .

Now, in given problem: Let 'r' be the rate of interest

Time to double the amount=29 years

Thus by rule 72 ,

`(72)/(r)=29\\\Rightarrow\ r=(72)/(29)=2.4827\%\approx2.5\%`

Therefore, C is the right option.