Jordan invests $100 and doubles her money in 8 years. Which operation illiterates the correct use of the rule 72 to estimate the annual interest rate
72x8
8+72x8
72/100
100/8
I put 8+72x8 is that right??
The rule of 72 is a very rough approximation of the relation between interest rate and time for any amount of investment to double.
e.g. For Jordan's money to double in 8 years
rate x 8 = 72
rate = 72/8 = appr 9%
I do not see the operation of 72/8 in your choices.
actual answer:
100(1+i)^8 = 200
(1+i) = 2
take the 8th root of both sides
1+i = 2^(1/8) = 1.0905..
i = .0905 or 9.05% , not bad
I have absolutely no idea where you got the 8+72x8 from.
Where you just guessing?
no those were the choices my maths teacher gave us
Either you or your teacher are in error.
No, the operation 8+72x8 does not properly apply the rule of 72 to estimate the annual interest rate. The correct way to use the rule of 72 to estimate the annual interest rate is to divide 72 by the number of years it takes for an investment to double.
So in this case, since Jordan doubled her money in 8 years, you should perform the operation 72/8.
Let's calculate it:
72 / 8 = 9
Therefore, the annual interest rate estimated using the rule of 72 is 9%.