Asked by Samantha Sciutto on May 25, 2024
Verified
Which of the following interest rates will come closest to doubling invested money in five years?
A) 13%
B) 14%
C) 15%
D) 16%
Doubling
The process of increasing an amount, size, or number by two times its original value.
Invested Money
Funds allocated by individuals or entities into financial instruments or assets with the expectation of generating income or profit.
Interest Rates
The amount charged by lenders as a percentage of the principal, as the cost for borrowing money.
- Ascertain and expound upon the yield of investments.
Verified Answer
VL
Vanessa LopezMay 27, 2024
Final Answer :
C
Explanation :
To approximate the number of years it takes to double invested money, we can use the rule of 72. This rule states that we can divide 72 by the annual interest rate to get an estimate of the number of years it takes for an investment to double. Using this rule, we can calculate the following:
- For an interest rate of 13%, it would take approximately 5.5 years to double invested money (72/13 = 5.5).
- For an interest rate of 14%, it would take approximately 5.1 years to double invested money (72/14 = 5.1).
- For an interest rate of 15%, it would take exactly 4.8 years to double invested money (72/15 = 4.8).
- For an interest rate of 16%, it would take approximately 4.5 years to double invested money (72/16 = 4.5).
Therefore, the best choice is C) 15%.
- For an interest rate of 13%, it would take approximately 5.5 years to double invested money (72/13 = 5.5).
- For an interest rate of 14%, it would take approximately 5.1 years to double invested money (72/14 = 5.1).
- For an interest rate of 15%, it would take exactly 4.8 years to double invested money (72/15 = 4.8).
- For an interest rate of 16%, it would take approximately 4.5 years to double invested money (72/16 = 4.5).
Therefore, the best choice is C) 15%.
Learning Objectives
- Ascertain and expound upon the yield of investments.