Here is a question for you to solve using the Rule of 72. Question: In 1967, tui
ID: 2701000 • Letter: H
Question
Here is a question for you to solve using the Rule of 72. Question: In 1967, tuition, room & board at a private college costs $3000. In 2007, the same services cost $48,000. Find the avereage annual rate of college-cost inflation, using the Rule of 72. Hint: first, estimate the number of doubles. Since each double represents 72 compounding percents, you can then find the total number of compounding percents. Finally, plug-into the formula rate * time = total compounding percents, and solve for rate.
Explanation / Answer
3000x(1+r)^40= 48000
r= 7.18%
72/7.18= 10.03 years