Future Business Leaders of America (FBLA) Business Calculations Practice Test

Using the Rule of 72, how many years will it take for a $1,000 investment at 6% to double?

1. A. 10

2. B. 18

3. C. 15

4. D. 12

The correct answer is: D. 12

The Rule of 72 is a simple way to estimate the number of years required to double the value of an investment at a fixed annual rate of return. To use this rule, you divide the number 72 by the annual interest rate. In this scenario, you are looking to determine how long it will take for a $1,000 investment to double at an interest rate of 6%. By applying the Rule of 72: 72 divided by 6 equals 12. This calculation indicates that it will take approximately 12 years for the investment to double in value at a 6% interest rate. This approach provides a quick and intuitive method to estimate the time needed for an investment to grow without the need for complex calculations or financial models. The other responses do not reflect the precise application of the Rule of 72 for this interest rate and therefore do not accurately represent the investment timeframe required for the doubling to occur.