Purchase Solution

Rule of 72

Not what you're looking for?

Ask Custom Question

The "rule of 72" states that the number of periods "n" that it will take to double an investment whose rate of return is "r" percent is approximately 72/r. That is, nr is approximately equal to 72. Verify this approximation for r = 4,6,8 and 10.

Purchase this Solution
Solution Summary

The solution explains the calculations using rule of 72.

Solution Preview

In order to answer this question, we need to calculate the time period (since we ...

Purchase this Solution
Free BrainMass Quizzes
Basics of corporate finance

These questions will test you on your knowledge of finance.

Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

View More Free Quizzes
Related BrainMass Solutions

  • Comparing simple and compound interest and the Rule of 72

    570003 Comparing simple and compound interest and the Rule of 72 232. As a consultant, a client is asking you about simple and compound interest, and "Rule of 72".

  • How would rule 72 apply?

    The rule of 72 tells you how fast your investment grows. Given the return on your investment (annualized), the rule of 72 calculates how fast your investment will double.

  • Time Required to Double the Value of Lump Sum Amount

    According to rule of 72, Time required to double the value of lump sum amount=72/rate of interest=72/10%=7.2 years Time required by which original amount will grow to 4 times after first doubling =72/rate of interest=72/10%=7.2 years After first

  • One Sample Hypothesis Testing on Average Weekly Tips

    Brigden conclude that her daily tips average more than $72? (a) State the null hypothesis and the alternate hypothesis. (b) State the decision rule. (c) Compute the value of the test statistic.

  • Rule of 72

    A. future value of an ordinary annuity Using the rule of 72, how long will it take $100,000 to equal $200,000 if you can earn 14% annually?

  • How long does it take to double the money on an investment?

    one rule is 'Rule of 72' According to this divide 72 by the interest rate. The answer you get is the period required to double the money on the investment.

  • Personal Finance: Rule 72

    Using the rule 72, approximate the following amounts a. If the value of land in an area is increasing 6 percent a year, how long will it take for property values to double? b.

  • Miscellaneous Finance

    This solution explains the following concepts: 1) The time it takes to double your money 2) The purpose of profit and loss statements 3) The definition of Rule '72' 4) How ethical constraints are used 5) How money flows from the Federal Reserve

  • Financial Impact: Interestment, Compounding, Annuities

    Increases in interest rates reduce the time period required to double the money invested as per rule of 72. Increase in interest rates and compounding reduces the present value of an annuity.

View More Related Solutions