PS: When the money doubles?

Question

A sum of money doubles in 12 years. what could be the approx. rate if the interest rate is compounded yearly? 

a. 5 
b. 6 
c. 7 
d. 8 
e. 9

defenestrate · Answer

B 6

divide 72 into the amount of years...a trick.

sharadGmat · Answer

B.. Something worth remembering.. 
1. (1.0X) to the power 2 = a little more than 1.0X + 1.0X 
2. (1.0X) to the power 3 = a little more than 1.0X + 1.0X + 1.0X

The difference between actual and aproximate value is more as X nears 9..

So in this case we need 2 to the power 1/12. 
sqrt 2 = 1.41
sqrt 1.41 = a little less than 1.2

Now we need cuberoot of 1.2..
Using observation 2, 1.0X = 1.06

So the rate equals 6%..

freetheking · Answer

That's a trick.. called "rule of 72" https://en.wikipedia.org/wiki/Rule_of_72

MA · Answer

its my own question so the answer is B.

the use of "rule of 72" is correct approach. it gives approaximate value for 5%-20% range. the desired number of years = 72/12 = 6

PS: When the money doubles?

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