Question

Using the rule of 72, mc003-1.jpg, how long will it take for the principal to double with an annual compound interest rate of 6%?
6 years

9 years

12 years

15 years

Answer 1

Answer:

Option C. 12 years

Step-by-step explanation:

Let principal amount taken = x

We know the formula of compound interest

Final amount = Principal amount×$(1+\frac{r}{n})^{nt}$

Where r = rate of interest (per year)

n = number of times compounded (annually)

t = time in years (years)

Here we have to find the time in which principal amount is doubled.

From the question r = 6% = .06

n = 1

Principal amount = P

Final amount = 2P

Now we put these values in the formula

$2P=P(1+.06)^{t}$

$2=(1.06)^{t}$

Now we take log on both the sides

$log(2)=log(1.06)^{t}$

0.301 = tlog(1.06)

0.301 = t×(.025)

$\frac{0.301}{0.25}=t$

t = 12 years.

Option C. 12 years is the answer.

Answer 2

The answer is C. 12 years because i just took the test on edgenuity