How long would it take to double the amount deposited in a fixed income security carrying 12% rate of interest ?
About 6 years
To find the doubling time at compound interest, use the Rule of 72: years to double = 72 / interest rate (in %).
Here, 72 / 12 = 6 years. Exact check: (1.12)^n = 2 gives n = ln 2 / ln 1.12 = 0.6931 / 0.1133, which is about 6.1 years.
So the deposit doubles in roughly 6 years; 5 years gives only about 1.76 times, while 7 and 8 years give about 2.21 and 2.48 times, which overshoot the doubling.
Hence, the answer is About 6 years.
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