Lars deposited $50 into a savings account for which interest is compounded quarterly. According to the rule of 72, what interest rate will cause his money to double in approximately 29 years?

A 0.6%
B 1.7%
C 2.5%
D 0.4%

2 Answer

  • Answer: C 2.5%

    Step-by-step explanation:

    The "Rule of 72" is a easy way to calculate how much time an investment will take to double with a given fixed annual rate of interest.

    Just we have to divide 72 by the annual rate of return(r), we can get a rough estimate of how many years it will take to double the initial investment .

    Now, in given problem: Let 'r' be the rate of interest

    Time to double the amount=29 years

    Thus by rule 72 ,

    [tex]\frac{72}{r}=29\\\Rightarrow\ r=\frac{72}{29}=2.4827\%\approx2.5\%[/tex]

    Therefore, C is the right option.

  • Answer:

    2.5% --APEX

    Step-by-step explanation: