Question

Which statements about doubling an investment are true? Check all that apply.

An investment of $5,000 will double in 6 years at an annual compound interest rate of 12%.


An investment of $1,000 will double at an annual compound interest rate of 18% in 6 years.


An investment of $350 will double in 9 years at a compound interest rate of 8%.


An investment of $2,000 will double at a simple interest rate of 5% in 20 years.


An investment of $700 will double in 12 years at a simple interest rate of 6%.

Answer 1

this is the correct answer

Answer 2

statement A, C, D, are true.

Explanation:

We check all the statements by the rule of 72 to find which statement about doubling an investment are true.

Formula we use =
`(72)/(R)` R = Rate of interest

Statement A :

An investment of $5,000 will double in 6 years at an annual compound interest rate of 12%.

`(72)/(12)` = 6 years

It will take 6 years to double the investment. This statement is true.

Statement B :

An investment of $1000 will double at an annual compound interest rate of 18% in 6 years.

`(72)/(18)` = 4 years

It will take 4 years to double the investment. This statement is not true.

Statement C:

An investment of $350 will double in 9 years at a compound interest rate of 8%.

`(72)/(8)` = 9 years

It will take 9 years to double the investment. This statement is true.

Statement D :

An investment of $2000 will double at a simple interest rate of 5% in 20 years.

Formula for Simple interest = (PRT)

I = (2000 × 0.05 × 20) = $2000

So the amount will be 4000 in 20 years. This statement is true.

Statement E :

An investment of $700 will double in 12 years at a simple interest rate of 6%

Interest = ( 700 × 0.06 × 12 ) = $504

Amount after 12 years 700 + 504 = $1204. This statement is not true.