Assume you put $2,000 into a tax-free investment and leave it there for 45 years at an annual rate of 8%. According to the Rule of 72, your investment will grow to a value of about $64,000

Indicate whether the statement is true or false.


Answer: TRUE
Explanation: According to the Rule of 72, an investment earning 8% a year will double in value approximately every 9 years. Thus, the $2,000 will grow to about $64,000 in 45 years. In 45 years, the original investment will double five times ($2K × 2 = $4K, $4K × 2 = $8K, $8K × 2 = $16K, $16K × 2 = $32K, and $32K × 2 = $64K).

Business

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