Question

Andrew got his first job at the age of 23, earning $30,000 a year. Andrew lives in an economy where all incomes grow at 3 percent per year. How old will Andrew be when his income will double?

Answer 1

Using the Rule of 72, it will take approximately 24 years for Andrew's income to double with a 3% annual growth rate. Andrew will be 47 years old when his income doubles from $30,000 to $60,000.

Step-by-step explanation:

The student's question is about determining when Andrew's income will double, given that he starts earning $30,000 a year at the age of 23, and his income grows at a compound growth rate of 3% per year. To calculate when Andrew's income will double, we can use the Rule of 72, which is a quick, useful formula that estimates the number of years required to double the invested money at a given annual rate of return. The formula states that you divide the number 72 by the annual growth rate.

Using the Rule of 72:
72 / 3% = 24 years

Therefore, it will take approximately 24 years for Andrew's income to double from $30,000 to $60,000. Since Andrew started earning at the age of 23, he will be 23 + 24 = 47 years old when his income doubles.