Question

The Rule of 72 is a useful approximation for many interest rates and periods for the time it takes a lump sum to double in value. For a 10 percent interest rate, calculate the time that will be taken for a lump sum to double in value. (Hint: Use the Solver function in Excel.) (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Answer 1

Answer:

The number of years to double the lump sum in value is;

N = 72/10 = 7.20

N = 7.20 years

Step-by-step explanation:

Using the rule of 72 for the approximation:

The formula for rule of 72 is;

Number of years to double = 72/interest rate in percentage

Given;

Interest rate = 10%

The number of years to double the lump sum in value is;

N = 72/10 = 7.20

N = 7.20 years