Rule of 72 says: for investment to become n times it takes
=72*ln(n)/ln(2)*1/rate=72*LN(75)/LN(2)*1/15.5
=28.93386747 years
Use the Rule of 72 to approximate when Carrie can multiply her initial financial investment 75-fold,...
Use the Rule of 72 to approximate when an investor can multiply his initial investment 75-fold, if the interest rate is 15 ½ %.
Question 2 (0.5 points) Use the Rule of 72 to approximate how many years it will take money to double when growing at an interest rate of 4% per year.
3. Investment Horizons. How long does the Rule of 72 predict that it will take for $500 to double in value when the effective annual interest rate is 1 percent? Exactly how many years will it take for $500 to double in value when the effective annual interest rate is 1 percent?
Question Help Use the "Rule of 72" to determine the following (a) The number of years it takes to accumulate $13,000 in a savings account when P-36,500 and i 9% per year (b) The number of years it takes to accumulate $26,000 in a savings account when P-36.500 and i-9% per year. (c) The average annual interest rate. i required to double an initial investment P in 17 years. (a) The number of years it takes is B (Round to...
3. The Rule of 72 is a very useful approximation for understanding exponential growth. The Rule states that (72 / the interest rate) = doubling time. For example, if the interest rate is 10% and you invest $10 today, in 7.2 years you will have $20. (72/10 = 7.2, the doubling time) My sister, a financial planner, would suggest that you save today for peace of mind. So today, let's put $1,000 in a mutual fund that rather consistently yields...
3. The "rule of 72" says to divide 72 by the annual interest rate to estimate the number of years needed for an initial investment earning that rate to double. How long would it take for $5 earning 6% a year to grow to $20? a. 12 years b. 24 years c. 36 years d. 48 years 4. If the tractor costs $124.000 (also the loan amount), and the 8 percent loan will be paid back in 5 equal annual...
both ideas require a $12,500 investment today (T-o 6), while Investment B will grow to $25,000 at the ou are trying to compare two six year investment ideoas, Investment A will grow to $50,000 at the end of year 6 (T- end of year 6-6). Estimate the annualized return for each investment using the Rule of 72. Next, find the Compound Anmual Growth Rate (i.e. geometric average) for each investment, which we learned is more precise that the Rule of...
No need for explanation You are trying to compare two six year investment ideas; both ideas require a $12,500 investment today (T-0). Investment A will grow to $50,000 at the end of year 6 (T-ó), while Investment B will grow to $25,000 at the end of year 6 (T=6). Estimate the annualized return for each investment using the Rule of 72, Next, find the Compound Annual Growth Rate (i.e. geometric average) for each investment, which we learned is more precise...
The treasurer for Pittsburgh ironworks wishes to use financial futures to hedge her interest rate exposure. She will sell five treasury futures contracts at 195,000 per contract. It is July and the contract must be closed out in December of this year. Long-term interest rates are currently 14.30%. If they increase to 15.50%, assume the value of the contracts will go down by 15%. Also if interest rates do increase by 1.2 percent, assume the firm will have additional interest...
A project requires an initial investment of $200,000 and expects to produce a cash flow before taxes of $120,000 per year for two years (i.e., cash flows will occur at t = 1 and t = 2). The corporate tax rate is 21 percent. The assets will depreciate using the MACRS year 3 schedule: (t = 1: 33%); (t = 2: 45%); (t = 3: 15%); (t = 4: 7%). The company's tax situation is such that it can use...