Question

5. Miguel plans on retiring in 16 years, and he wants to double his money by that time. He's contacted various banks, looking for a CD that compounds interest monthly, and to calculate what annual interest rate he needs, he is using the Rule of 72.
Part I: What is the rule of 72? To represent the annual interest rate, use r. ​

Answer 1

The rule of 72 that represents the annual interest rate is defined below , the rate is 4.5% .

In the question ,

it is given that ,

Miguel is planning to retire after 16 years ,

and he wants to double his money ,

The Rule of 72 is a simplified formula , that is used to calculate the time that an investment will take to double the value , based on its rate of return .

By the rule of 72 ,

Number of years that would take an investment to double = 72/(rate of interest )

n = 72/r

given the time is 16 years .

16 = 72/r

r = 72/16

r = 4.5%

Therefore , The rule of 72 that represents the annual interest rate is defined below , the rate is 4.5% .

Learn more about Rule Of 72 here

brainly.com/question/28016427

#SPJ4