Question

In its first 10 years a mutual fund produced an average annual return of 20.71​%. Assume that money invested in this fund continues to earn 20.71​% compounded annually. How long will it take money invested in this fund to​ double

Answer 1

Using the economic principal the rule of 72 we can divide 72 by the average annual rate of return to determine when an investment will double in value. 72/20.71 results in approximately 3.48 years to double in value.