Using the Rule of 72, determine
1. Tanner has invested $500 for college. What rate of return must Tanner earn for his investment to double in six years?
2. Jerrod owes $2,000 on a credit card that charges him an annual percentage rate of 18%. If Jerrod stopped making payments, how long would it be before the balance on his card reached $4,000?
3. Because Jerrod missed a payment, the credit card company automatically raised the interest rate to 24%. How many years would it be until his balance doubles, assuming he continues to make no payments?
4. If you invest $250 at 16% interest, how much will you have after 18 years?
5. Ron and Amie invested $5000 in an educational savings fund for their daughter when she was born. They were never able to add anything else to the account. What was the rate of return if they had $10,000 in the account after 12 years?
6. Kari would like to save $10,000 for a down payment on a house. Illustrate the difference in years it will take her to double her current $5,000 savings based on a 6%, 12%, and 18% interest rate.
7. What annual interest rate will cause your money to double in four years?
Celebrities, from athletes and actors to entertainers and producers, have routinely made more money than most of us will ever see in our lives, yet still end up bankrupt. On the flip side, entire families can comfortably live on as little as $30,000. How is this possible? What can you do to avoid poor financial decisions?