Mack opened a CD 10 years ago at an interest rate of 7.8% compounded monthly. According to the rule of 72, when did she have half as much money as she does now?
A. About 9.2 years ago
B. About 4.6 years ago
C. About 3.9 years ago
D. About 7.8 years ago
9.2 years ago
To find the answer, we can use the rule of 72 formula:
Years required to double = 72 / interest rate
In this case, Mack's money doubled, so we can use the formula to find the number of years required for that to happen.
Years required to double = 72 / 7.8 = 9.23 years
This means that it took approximately 9.23 years for Mack's money to double. Therefore, the correct answer is:
A. About 9.2 years ago
To determine when Mack had half as much money as she does now, we can use the rule of 72.
The rule of 72 states that the time it takes for an investment to double in value is approximately equal to 72 divided by the interest rate.
In this case, Mack opened the CD 10 years ago at an interest rate of 7.8% compounded monthly.
Using the rule of 72, we can calculate the approximate time it takes for the investment to double:
72 / 7.8 = 9.23
So, it takes approximately 9.23 years for Mack's investment to double in value.
Therefore, when Mack had half as much money as she does now, it would have been approximately 9.23 years before today.
Answer: A. About 9.2 years ago.