Using the rule of 72, mc003-1.jpg, how long will it take for the principal to double with an annual compound interest rate of 6%? 6 years 9 years 12 years 15 years

Option C. 12 years

Step-by-step explanation:

Let principal amount taken = x

We know the formula of compound interest

Final amount = Principal amount×

Where r = rate of interest (per year)

n = number of times compounded (annually)

t = time in years (years)

Here we have to find the time in which principal amount is doubled.

From the question r = 6% = .06

n = 1

Principal amount = P

Final amount = 2P

Now we put these values in the formula

Now we take log on both the sides

0.301 = tlog(1.06)

0.301 = t×(.025)

t = 12 years.

Option C. 12 years is the answer.

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