Assuming annual compounding, find how long it would take for the general level o

Question

Assuming annual compounding, find how long it would take for the general level of prices to double at the following annual inflation rates a. 3% b. 6%. c. 9% d. Check your answers using the Rule of 70 or the Rule of 72, whichever applies. a. It will take approximately years. (Round to one decimal place as needed.) b. It will take approximately years. (Round to one decimal place as needed.) c. It will take approximately years. (Round to one decimal place as needed.) d. Use the Rule of 70 or the Rule of 72, whichever applies, to check your answer to a. It will take approximately years. (Round to one decimal place as needed) Use the Rule of 70 or the Rule of 72, whichever applies, to check your answer to b. It will take approximately years. (Round to one decimal place as needed.) Use the Rule of 70 or the Rule of 72, whichever applies, to check your answer to c. It will take approximately years. (Round to one decimal place as needed)

Explanation / Answer

The rule of 70 and the rule of 72 give rough estimates of the number of years it would take for a certain variable to double.

To measure the time period at which an investment gets doubled based on the Rule 70 and 72 methods. Rule 70 investment doubling time can be calculated by dividing the title 70 by the given interest rate. similarly for rule of 72

Using Rule of 70

formula

70 / Interest Rate = Years

a) 70 / 3 = 23.3 years

b) 70/6 = 11.7 years

c) 70/9 =7.8 years

d) using rule of 72

formula

70 / Interest Rate = Years

72 / 3 =23.45 (Exact) =24 (estimate)

72/ 6 = 11.9 (Exact ) = 12 (estimate )

72/9 = 8.04 ( Exact) = 8 (estimate)

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