Question
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Double your wealth. Kant Miss Company is promising its investors that it will double their money every
5 years. What annual rate is Kant Miss promising? Is this investment a good deal? If you invest
now and Kant Miss is able to deliver on its promise, how long will it take your investment to reach
?
Using the Rule of 72, what annual rate is Kant Miss promising?
(Round to the neares_ whole percentage.)

Ask by Gibbs Grant. in the United States
Jan 22,2025

Upstudy AI Solution

Tutor-Verified Answer

Answer

Kant Miss is promising an annual rate of 14%.

Solution

To determine the annual rate Kant Miss Company is promising using the Rule of 72, follow these steps:

Rule of 72 Overview

The Rule of 72 is a simple formula to estimate the number of years required to double an investment at a fixed annual rate of interest, or conversely, to estimate the annual rate needed to double an investment in a fixed number of years.

Given:

  • Doubling Period: 5 years

Calculating the Annual Rate:

Using the Rule of 72:

Rounding:

  • Nearest Whole Percentage: 14%

Answer:

14 %

Answered by UpStudy AI and reviewed by a Professional Tutor

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Beyond the Answer

Kant Miss Company claims it can double your money every 5 years. To find the annual rate, you can use the Rule of 72. Simply divide 72 by the number of years it takes to double (which is 5). So, . Rounding to the nearest whole percentage, Kant Miss is promising an annual rate of approximately 14%.
Now, let’s calculate how long it will take for your initial investment of to grow to . Given the approximate 14% annual interest, use the formula for compound interest: . Rearranging gives you . Plugging in the numbers, you’ll find it takes about 25.5 years to reach your goal. So, buckle up for a long ride if Kant Miss delivers on its bold claim!

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