Question

How many years will it take each situation to double its money? Situation A: Matthew invests $5,000 in an account with a compound interest rate of 12%. Situation B: Morgan invests $2,500 in an account with a compound interest rate of 8%. Situation C: Maysen invests $10,000 in an account with a compound interest rate of 4.5%. Whose money will double fastest?

Answer 1

Answer:

Matthew's money will double fastest in 6 years.

Step-by-step explanation:

The complete question is

Answer the question for each scenario by applying the rule of 72. How many years will it take each situation to double its money? Situation A: Matthew invests $5,000 in an account with a compound interest rate of 12%. Situation B: Morgan invests $2,500 in an account with a compound interest rate of 8%. Situation C: Maysen invests $10,000 in an account with a compound interest rate of 4.5%. Whose money will double fastest?

we know that

The Rule of 72 is a simple way to determine how long an investment will take to double given a fixed annual rate of interest. By dividing 72 by the annual rate of return.

so

Situation A: Matthew invests $5,000 in an account with a compound interest rate of 12%

$\frac{72}{12}=6\ years$

Situation B: Morgan invests $2,500 in an account with a compound interest rate of 8%.

$\frac{72}{8}=9\ years$

Situation C: Maysen invests $10,000 in an account with a compound interest rate of 4.5%

$\frac{72}{4.5}=16\ years$

therefore

Matthew's money will double fastest in 6 years.