Question

In its first 10 years a mutual fund produced an average annual return of 19.49​%. Assume that money invested in this fund continues to earn 19.49​% compounded annually. How long will it take money invested in this fund to​ double?

It will take approximately (enter your response here) ​year(s) for the money invested in this fund to double.
​(Round up to the nearest​ year.)

Answer 1

Using the Rule of 72, money invested in a mutual fund with a 19.49% annual compound interest rate will take approximately 4 years to double, after rounding up to the nearest whole year.

Step-by-step explanation:

To determine how long it will take for money invested in a mutual fund to double at an annual compounded interest rate of 19.49%, we can use the Rule of 72.

This rule states that you can estimate the number of years it will take to double the investment by dividing 72 by the annual rate of return.

To calculate this, we would divide 72 by the annual interest rate of 19.49%:

72 / 19.49 ≈ 3.69

So, it will take approximately 3.69 years for the money to double. Since we need to answer in whole years and the result is not a whole number, we round up to the next whole number, which is 4 years.

Therefore, it will take approximately 4 years for money invested in this fund to double when compounded annually at an interest rate of 19.49%.