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Rule of 72

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If you want to determine how much you will have in a retirement account if you place a specific payment (the annuity) into an account at the end of each period of time (a month or a year), you would use the ______ formula.

A. future value of an ordinary annuity
B. future value of an annuity due
C. present value of an ordinary annuity
D. present value of an annuity due

Using the rule of 72, how long will it take $100,000 to equal $200,000 if you can earn 14% annually?

A. 5.1429 years
B. 4.1529 years
C. 2.78 years
D. 1.38 years

The local printing company purchases a new copy machine that reduces the cost of making a color copy by ten cents a copy. It normally makes 50,000 color copies a year and is in the 28% income tax bracket. The tax consequence of this investment will be:

A. a decrease in income tax paid.
B. an increase in income tax paid.
C. no difference in income tax paid.
D. cannot tell with the information provided

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The expert responses to helps in discussing Rule of 72. The tax consequences of new copy machine purchases are determined.

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If you want to determine how much you will have in a retirement account if you place a specific payment (the annuity) into an account at the end of each period of time (a month or a year), you would use the ______ formula.

A. future value of an ordinary annuity

Using the rule of 72, how long will ...

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