Question

Which of these statements correctly defines the rule of 72

a. The theory that money has a 72% probability of doubling in value within a ten year period
b. Provides an exact number of years needed to double your money if the interest rate is 7.2 percent
c. Provides an approximation of the number of years needed to double your money given a particular rate of investment
d. States that you can double your money in one year if you can earn a rate of return of 72% for the year

Answer 1

The rule of 72 is an approximation that provides an estimate of the number of years needed to double your money given a particular rate of investment.

Step-by-step explanation:

The rule of 72 is an approximation that provides an estimate of the number of years needed to double your money given a particular rate of investment. It is calculated by dividing the number 72 by the annual growth rate. For example, if you have a growth rate of 6%, it would take approximately 72/6, or 12 years, for your money to double.