Which of the following equations represents an account that will double after approximately 6 years? y = 1(1.50)^x y = 2(1.17)^x y = 4(1.06)^x y = 3(1.12)^x

Accepted Solution

Answer: The correct answer is y = 3(1.12)^x.

One way to find this answer is to use the "Rule of 72". It states that if you divide 72 by the rate it will give you the approximate number of years an investment will take to double.

If you divide 72 by 12 you get 6, meaning it will take about 6 years. In the answer we select, the rate of increase is 1.12 or adding 12%.