Question

sing the rule of 70, if your parents place $10,000 in a deposit for you on the day you are born, approximately how much will be in the account when you retire at 70 years old if the deposit earns 4 percent per year? a. $400 b. $4,000 c. $160,000 d. $20,000 e. $80,000

Answer 1

Using the rule of 70, a $10,000 deposit at 4 percent annual interest will double approximately every 17.5 years, and after 70 years, it will amount to approximately $160,000.

Step-by-step explanation:

Using the rule of 70, we can approximate how long it will take for an investment to double by dividing 70 by the annual interest rate. With an interest rate of 4 percent per year, we divide 70 by 4, which gives us 17.5. This means that every 17.5 years, the initial deposit will double. If the money is left untouched from the day of birth until retirement at age 70, we would calculate 70 years divided by 17.5, resulting in 4 doubling periods. Beginning with $10,000, after the first doubling period, the money would be $20,000; after the second, $40,000; after the third, $80,000; and after the fourth, $160,000.