Answer:
b. $11,820
Step-by-step explanation:
The 'rule of 72' tells you the doubling time of this account is about ...
(72 years)/(4.25) = 16.9 years
So, in 18 years, the amount will be slightly more than double the present value. That is, the present value is slightly less than half the future amount.
$25,000/2 = $12,500
The closest answer choice is ...
$11,820
__
The present value of that future amount is ...
PV = FV×(1 +r)^-t = $25,000×1.0425^-18 ≈ $11,818.73
The present value is about $11,820.
