Question

Colette opened a CD 10 years ago at an interest rate of 8.8% compounded quarterly. According to the rule of 72, when did she have half as much money as she does now?

Answer 1

about 8.2 years ago

Answer 2

8.2 years ago.

Explanation:

We have been given that Colette opened a CD 10 years ago at an interest rate of 8.8% compounded quarterly. We are asked to find when did she have half as much money as she does now.

Since rule of 72 states the time it will take an investment to be double.

First of all, we will divide 72 by 8.8 to find the time it will take to double her money.

`\text{Time it will take to double Colette's money}=(72)/(8.8)`

`\text{Time it will take to double Colette's money}=8.1818\approx 8.2`

Since it will take 8.2 years to double Colette's money, so this means that 8.2 years ago she had half much money as she has now.

Therefore, our answer will be 8.2 years ago.