Question

Investment: Rule of 70

Use the Rule of 70 from Exercise 37 to approximate the times necessary for an investment to double in value when
(a) r = 10%
(b) r = 7%

Answer 1

a) 7 years for the investment to double in value.

b) 10 years for the investment to double in value.

Explanation:

The rule of 70% states that, for an investment to double in value, the required time is 70/r, in which r is the annual interest rate, as a percent.

So

(a) r = 10%

It is going to take 70/10 = 7 years for the investment to double in value.

(b) r = 7%

It is going to take 70/7 = 10 years for the investment to double in value.