A man has proposed a new thumb rule of doubling period.According to the proposed thumb rule, Doubling Period = (22/lnterest Rate).and Interest rate, r= 13%.(a) Calculate the doubling period and compare with the Rule of 72.Assume the scientist also proposed another thumb rule as, Doubling Period =(0.25 + 22/Interest Rate). and Interest rate, r= 13%.(b) Calculate the doubling period and compare with the Rule of 69.

Answered: A man has proposed a new thumb rule of…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Rule of 72

In finance, the Rule of 72 is a recipe that gauges the measure of time it takes for speculation to twofold in esteem, acquiring a fixed annual rate of return. The standard is an alternate route, or back-of-the-envelope, the computation to decide the measure of time for a venture to twofold in esteem. The straightforward computation is partitioning 72 by the yearly financing cost

Rule of 69

Rule of 69 is an overall principle to gauge the time that is needed to make the speculation to be multiplied, keeping the loan cost as a persistent accumulating loan fee, i.e., the loan fee is building each second. It doesn't give the specific time however is extremely near vicinity without utilizing the unadulterated numerical recipe.