Question

Jill invested $500 in an account with a compound interest rate of 6%. Cheryl invests $600 in an account with a compound interest rate of 4%.Find out in how many years each doubles her money. Using the rule of 72, es025-1.jpg, what is the difference in the number of years to double their money?

Answer 1

Answer:

Jill doubles her money in 12 years.

Cheryl doubles her money in 18 years.

Difference = 6 years.

Step-by-step explanation:

We have been given that Jill invested $500 in an account with a compound interest rate of 6%. Cheryl invests $600 in an account with a compound interest rate of 4%.

Since the rule of 72 states that to find the number of years it will take an amount to double, we should divide 72 by the annual interest rate.

Let us find the time it will take to double Jill's money by dividing 72 by 6 as annual interest rate is 6%.

$\text{Time it will take to double Jill's money}=\frac{72}{6}$

$\text{Time it will take to double Jill's money}=12$

Therefore, it will take 12 years to double Jill's money.

Now we will divide 72 by 4 to find the time it will take to double Cheryl's money.

$\text{Time it will take to double Cheryl's money}=\frac{72}{4}$

$\text{Time it will take to double Cheryl's money}=18$

Therefore, it will take 18 years to  double Cheryl's money.

To find the difference in the number of years to double their money we will subtract 12 from 18.

$\text{The difference in the number of years to double their money}=\text{18 years - 12 years}$

$\text{The difference in the number of years to double their money}=\text{6 years}$

Therefore, the difference in the number of years to double their money is 6 years.

Answer 2

72/6 = 12
72/4 = 18
18 - 12 = 6 ← the answer.