To determine the interest rate needed to double an investment over six years, we can use the Rule of 72. The Rule of 72 is a simplified way to estimate the number of years required to double your investment at a fixed annual rate of interest. According to this rule, you divide 72 by the number of years required to double the investment. This gives you an approximate annual interest rate.
Here's the step-by-step solution:
1. Identify the doubling time: The question specifies that we want the investment to double in 6 years.
2. Apply the Rule of 72: The Rule of 72 formula is:
[tex]\[
\text{Interest Rate} = \frac{72}{\text{Doubling Time}}
\][/tex]
3. Substitute the doubling time into the formula: In this case, the doubling time is 6 years. Thus,
[tex]\[
\text{Interest Rate} = \frac{72}{6}
\][/tex]
4. Calculate the interest rate:
[tex]\[
\text{Interest Rate} = 12 \text{ percent}
\][/tex]
Therefore, the approximate interest rate needed to double an investment over six years is 12 percent.
So the correct answer is:
О
12 percent
