Using the Rule of 72, approximately how many years will it take for an investment to double at a 9% annual return?

Using the Rule of 72, approximately how many years will it take for an investment to double at a 9% annual return?

• A. 8 years
• B. 10 years
• C. 7 years
• D. 9 years

Answer: (A)

The Rule of 72 is a quick way to estimate how many years it takes for an investment to double with a fixed annual return when compounding occurs. You divide 72 by the annual percentage rate to get the approximate doubling time. For a 9% return, that gives 72 ÷ 9 = 8 years. Quick check: (1.09) raised to the 8th power is about 1.99, essentially doubling. The exact calculation using logarithms gives t = ln(2) / ln(1.09) ≈ 8.04 years, so 8 years is the right rough answer.

The Rule of 72 is a quick way to estimate how many years it takes for an investment to double with a fixed annual return when compounding occurs. You divide 72 by the annual percentage rate to get the approximate doubling time.

For a 9% return, that gives 72 ÷ 9 = 8 years. Quick check: (1.09) raised to the 8th power is about 1.99, essentially doubling. The exact calculation using logarithms gives t = ln(2) / ln(1.09) ≈ 8.04 years, so 8 years is the right rough answer.