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Question:
How long would it take $1,000 to double if it were invested in a bank that pays 6% per year?
The Rule of 72:
The Rule of 72 is a technique used broadly by analysts and bankers to quickly determine how long it takes for a certain lump sum of money to double over a given time period. It can also determine the rate of interest required to double your money. The rule states that an investment or a cost will double when:
(Investment Rate per year as a percent) * (Number of Years) = 72
Answer and Explanation:1
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The answer is: 12 years.
We can use the rule of 72 to answer this question. The rule states that an investment or a cost will double when:
(Investm...
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Interest Rate | Definition, History & Examples
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Chapter 6/ Lesson 12
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Understand the interest rate definition. Learn more about interest rate meaning and its significance in formulating policy in an economy with examples.
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