Answer:
Investment of $250 would be approximately $4,000 after 18 years.
Step-by-step explanation:
Rule of 72 is a simple way to determine how long an investment will take to double given a fixed annual rate of interest.
By dividing 72 by an annual rate of interest, we can estimate of how many years it will take for the initial investment to double.
= [tex]\frac{72}{16}[/tex] = 4.5 years
It will take 4.5 years to double from $250 to $500
In 18 years it will double [tex]\frac{18}{4.5}[/tex] = 4 times
therefore, the investment would be = $250 ⇒ 500 ⇒ $1000 ⇒ 2000 ⇒ 4000
Investment of $250 would be approximately $4,000 after 18 years.
$500 will become $4000 in 18 years. A further explanation is below.
Given,
Rate of interest,
As per rule 72,
By substituting the values, we get
Required time = [tex]\frac{72}{16}[/tex]
= [tex]4.5[/tex]
In 4.5 years, $250 investment will be:
= [tex]250\times 2[/tex]
= [tex]500[/tex] ($)
In 4.5 years, $500 investment will be:
= [tex]500\times 2[/tex]
= [tex]1000[/tex] ($)
In 4.5 years, $1000 investment will be:
= [tex]1000\times 2[/tex]
= [tex]2000[/tex] ($)
In 4.5 years, $2000 investment will be:
= [tex]2000\times 2[/tex]
= [tex]4000[/tex] ($)
Thus the above answer is correct.
Learn more:
https://brainly.com/question/13324776
