The rule of 72 is a handy rule for estimating how long it takes money to double with annual compounding. If r is the annual interest rate(expressed as a decimal then the doubling time is approximately 72/(100r) years. If you express the interest rate as R percent then the doubling time is approximately 72/R years. a. Calculate the balance at the end of the predicted doubling time for each $1000 with annual compounding for the small growth rates of 3 percent, 4 percent and 6 percent.
The rule of 72 is a handy rule for estimating how long it takes money to double with annual compounding. If r is the annual interest rate(expressed as a decimal then the doubling time is approximately 72/(100r) years. If you express the interest rate as R percent then the doubling time is approximately 72/R years. a. Calculate the balance at the end of the predicted doubling time for each $1000 with annual compounding for the small growth rates of 3 percent, 4 percent and 6 percent.
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter4: Time Value Of Money
Section: Chapter Questions
Problem 8MC: Define the stated (quoted) or nominal rate INOM as well as the periodic rate IPER.
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The rule of 72 is a handy rule for estimating how long it takes money to double with annual compounding. If r is the annual interest rate(expressed as a decimal then the doubling time is approximately 72/(100r) years. If you express the interest rate as R percent then the doubling time is approximately 72/R years.
a. Calculate the balance at the end of the predicted doubling time for each $1000 with annual compounding for the small growth rates of 3 percent, 4 percent and 6 percent.
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