Question

If you put $75,500 in the stock market, how many years would it take you to double your money if the market is making 12% a year?

a. 2
b. 3
c. 5
d. 6

Answer 1

Using the Rule of 72, divide 72 by the annual return rate of 12% to find it would take approximately 6 years to double the investment at this rate. Answer choice d. 6 is correct.

Step-by-step explanation:

To calculate how many years it would take to double your money in the stock market at an annual rate of 12%, we can use the Rule of 72. The Rule of 72 is a simple way to estimate the number of years required to double the invested money at a given annual rate of return. You divide 72 by the annual rate of return to get the approximate number of years.

In this case:

1. Divide 72 by the annual return rate (12%).
2. 72 ÷ 12% = 72 ÷ 12 = 6 years.

Therefore, it would take approximately 6 years to double the investment if the market is making 12% a year. The correct answer is d. 6.