Question

Jala put $600 in an interest bearing account with a annual compound interest rate of 5%. Jala determined that after seven years, she will have a total balance of $844.26. Using the rule of 72, mc010-1.jpg how many more years will it be before Jala’s $600 doubles in value? Round to the nearest tenth.

Answer 1

To find the number of years an initial capital will double, we use the following approximation:

Number of years needed to double a capital = 70/interest rate (without the %)
The rate being 5, Number of years = 70/5 = 14 years,

Proof: (Remember te formula of compound interest A = P(1+interset)ⁿ

1200 = 600(1+5%)ⁿ
1200/600 = (1.05)ⁿ
2= (1.05)ⁿ
ln(2) = (n)ln(1.05)
0.693147181 = (n)(0.048790164)

n= 0.693147181/0.048790164
n= 14.26 years ≈ 14 years

Answer 2

Answer:7.4 years on edge

Explanation: