Quiz: Compound Interest and Time Value of Money 4 questions · 80% to pass 1. Using the Rule of 72, approximately how long will it take to double your money at a 9% annual return?6 years8 years9 years12 years72 divided by 9 equals 8. At a 9% annual return, your money approximately doubles every 8 years.2. If you invest $1,000 at 6% annual return, approximately how much will you have after 12 years?$1,720$2,000$2,500$3,000Using the Rule of 72: 72 / 6 = 12 years to double. So $1,000 becomes approximately $2,000 after 12 years at 6%.3. What is the key difference between simple and compound interest?Simple interest has a higher rateCompound interest only applies to savings accountsCompound interest earns returns on previously earned interestSimple interest compounds monthlyCompound interest earns returns on your original principal AND on all previously accumulated interest, creating exponential growth.4. Why does starting to invest at 25 instead of 35 make such a large difference?Younger people get better interest ratesTax rates are lower when you are youngEarly dollars have more time to compound exponentiallyInflation is lower for younger investorsCompound growth is exponential, so each additional year of compounding has a bigger effect than the last. Starting 10 years earlier gives those dollars a massive head start. Check answers Retake quiz Back to lesson Next lesson →