Ask Question
22 June, 12:16

The Rule of 70 applies in any growth rate application. Let's say you have $1000 in savings and you have three alternatives for investing these funds.

A savings account earning 1% interest per year.

A U. S. Treasury bond mutual fund earning 3% interest per year.

A stock market mutual fund earning 8% interest per year.

How long would it take to double your savings in each of these 3 accounts?

+2
Answers (1)
  1. 22 June, 12:31
    0
    a. 7,000 years

    b. 2,333 years

    c. 875 years

    Explanation:

    Based on rule of 70, we can have the following formula to do the calculation:

    Number of years to double = 70 : Interest rate per year ... (1)

    We can now calculate as follows:

    a. A savings account earning 1% interest per year.

    Number of years to double = 70 : 1% = 7,000 years

    b. A U. S. Treasury bond mutual fund earning 3% interest per year.

    Number of years to double = 70 : 3% = 2,333 years

    c. A stock market mutual fund earning 8% interest per year.

    Number of years to double = 70 : 8% = 875 years

    Note:

    It can be observed that the higher the interest rate, the lower the number of years it will take the investment to double.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “The Rule of 70 applies in any growth rate application. Let's say you have $1000 in savings and you have three alternatives for investing ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers