Questions: Calculate: Approximately how long will it take to double your money if the APY is 6.50%?

Transcript text: 7) Calculate: Approximately how long will it take to double your money if the APY is $6.50 \%$ ? 9 years 10 years 11 years 12 years

Solution

Solution Steps

To determine how long it will take to double your money with a given annual percentage yield (APY), we can use the Rule of 72. The Rule of 72 is a simple formula to estimate the number of years required to double the investment at a fixed annual rate of interest. The formula is:

\[ \text{Years to double} = \frac{72}{\text{APY}} \]

Given an APY of 6.50%, we can plug this value into the formula to find the approximate number of years.

Step 1: Apply the Rule of 72

To estimate the number of years required to double an investment with an annual percentage yield (APY) of $6.50\%$, we use the Rule of 72:

\[ \text{Years to double} = \frac{72}{\text{APY}} = \frac{72}{6.5} \]

Step 2: Perform the Calculation

Calculating the above expression gives:

\[ \text{Years to double} \approx 11.0769 \]

Step 3: Round the Result

Rounding $11.0769$ to four significant digits results in:

\[ \text{Years to double} \approx 11.08 \]