The rule of 72 is a straightforward formula used in finance to estimate the number of years required to double the value of an investment given a fixed annual rate of return.
Here is how it works:
1. The formula for the rule of 72 is:
[tex]\[
\text{Years to double investment} = \frac{72}{\text{Annual rate of return}}
\][/tex]
2. By applying this rule, you can quickly determine how long it will take for your investment to grow twofold without complex calculations.
Given the provided choices:
- Option A suggests the time to triple the investment, which is not correct as the rule of 72 specifically estimates the time to double the investment.
- Option C talks about the time to earn a 10% interest, which is unrelated to doubling the investment.
- Option D mentions earning $72 on any investment amount, which again does not relate to the rule of 72.
Therefore, the correct answer is:
O B. the approximate time it takes an investment to double in value
