- $2 Million
- $4 Million
- $6 Million

*Answer (2). Using the rule of 72, an investment of 7.2% per year means Tom's money will double every ten years (72/7.2=10 years). Hence Tom's money would have doubled twice over 20 years. 1 x 2 x 2= 4*

Q2 (Basic). Tom, now age 50, decides to continue investing his $4 million into the same fund which guarantees an annual return of 7.2% per year. How much will Tom have at age 70 (twenty years later)?

- $8 Million
- $12 Million
- $16 Million

*Answer (3). Using the same rule of 72, an investment of 7.2% per year means Tom's fund will double every ten years. Hence 4 x 2 x 2= 16*

Q3 (Intermediate). How much more did Tom's money grow between the age of 50 to 70 than when he was between the age of 30 to 50?

- $8 Million
- $9 Million
- $10 Million

*Answer (2). Age 30 to 50, Tom's investment grew by*

__$3 Million__. At age 50 to 70, Tom's investment grew by__$12 Million.__Hence $12mil - $3Mil =__$9 Mil.__

Q4 (Advanced). What did you learn?

*Answer: Compounding and Time factor makes hell lots of a difference in wealth accumulation. Start young.*

I fully agree. It should be in each O-level exam to prepare for life. Because whether we want it or not there is always a test on our understanding of compounding. The test is called 'the rest of your life'.

ReplyDeleteHi Tacomob,

DeleteYup, these questions are indeed useful. It is one way to show the practicability of simple maths concepts in our daily life.

Informative post! Thank you!

ReplyDelete