Question

Paul invested $10,000 and expects to earn 6% on the investment. Using the Rule of 72, approximately how many years will it take for Paul's investment to be worth $20,000?

Answer 1

Paul can calculate the time it will take to double his investment using the Rule of 72 by dividing 72 by the annual interest rate, which is 6% in his case. It will take approximately 12 years for Paul's investment to grow to $20,000.

Step-by-step explanation:

Using the Rule of 72, we can calculate the number of years it will take for an investment to double at a given annual interest rate. To find out how many years it will take for Paul's investment to grow from $10,000 to $20,000 with a 6% interest rate, we use the formula provided by the rule of 72. You divide the number 72 by the annual interest rate. Therefore, it would be 72 divided by 6, which equals 12 years.

So, according to the rule of 72, Paul will have to wait approximately 12 years for his investment to double to $20,000.