Question

Using the rule of 72, how long would it take for your $1,000 investment to double at 5%?

Answer 1

14 years

Step-by-step explanation:

Given the following data;

ARR = 5%

Principal = $1000

From the rule of 72;

Rule of 72 can be defined as a metric used to determine the time it will take to double an investment based on its growth rate. Also, it can be used to determine the economic growth by measuring the Gross Domestic Products (GDP).

Mathematically, it is given by the formula;

`Number \; of \; years \; to \; double = \frac {72}{ARR}`

Where;

ARR is the annual rate of return in percent.

Substituting the values into the formula, we have;

`Number \; of \; years \; to \; double = \frac {72}{5}`

`Number \; of \; years \; to \; double = 14.4`

Therefore, the number of years to double = 14.4 ≈ 14 years