Question

At an annual inflation rate of 6.4%, how long will it take the Consumer Price Index (CPI) to double? (Round your answer to two decimal places.)

Answer 1

It will take approximately 11.25 years for the CPI to double with an annual inflation rate of 6.4%, as determined by the Rule of 72.

Step-by-step explanation:

To calculate how long it will take for the Consumer Price Index (CPI) to double at an annual inflation rate of 6.4%, we can use the Rule of 72.

This is a simplified formula that estimates the number of years required to double the CPI at a constant annual interest rate, by dividing 72 by the annual rate of inflation.

The formula is: Years to Double = 72 ÷ Inflation Rate

In this case:

Years to Double = 72 ÷ 6.4

This gives us approximately:

Years to Double = 11.25 years

Hence, it will take about 11.25 years for the CPI to double at an annual inflation rate of 6.4%.