If a sum of money doubles in 10 years at compound interest, what is the rate of

If a sum of money doubles in 10 years at compound interest, what is the rate of interest?

If a sum of money doubles in 10 years at compound interest, what is the rate of interest?

Step 1: Understand that compound interest means the money grows on itself over time.
Step 2: Know that if a sum of money doubles, it means you have twice the amount you started with after a certain period.
Step 3: Recognize that the question states this doubling happens in 10 years.
Step 4: Use the Rule of 72, which is a simple way to estimate the interest rate needed to double your money.
Step 5: The Rule of 72 formula is: Rate = 72 / Number of years to double.
Step 6: Plug in the numbers: Rate = 72 / 10.
Step 7: Calculate the result: Rate = 7.2%.
Step 8: Conclude that the rate of interest is approximately 7.2%.

Compound Interest – Understanding how money grows over time with compound interest and the relationship between time, rate, and doubling of investment.
Rule of 72 – A simplified formula to estimate the number of years required to double the investment at a fixed annual rate of return.