Answered: If you have an investment that is…

If you have an investment that is earning 5.5% annually, use the Rule of 72 to estimate how many years it will take for your investment to double.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 16P

See similar textbooks

Related questions

Q: Suppose an investment earns 2.5% interest compounded continuously. Find the future value of a $3400…

A: Present value is an estimate of the present value of future cash values that may be received at a…

Q: You are going to invest $6829 in 1 years and $7200 in 4 years. If you expect to earn a return of…

A: The time value of money is a fundamental concept in finance that recognizes the idea that money…

Q: u are able to invest $100 at the end of 1 year into an investment earning 6%. At the end of year 2,…

A: Future value of money increases with due to accumulation of interest over the period of time of…

Q: How much is the sum of the present value of the expected return over those periods

A: Cash Flows (Year 1-10) (CF) = $15,000 per year Annual interest rate (r) = 5% Time Period (t) = 10…

Q: About how many years would it take for your investment to grow sixfold if it were invested at an APR…

A: Using NPER in Excel

Q: Assume you can earn 12% per year on your investments. a. If you invest $60,000 for retirement at age…

A: Part 2:Explanation:step 1:Understand the formula for calculating future value (FV):FV = C * (1 +…

Q: Double your money-Rule of 72. Approximately how long will it take to double your money if you get an…

A: Step 1 Time value of money The idea of the time value of money (TVM) holds that a quantity of money…

Q: Calculating the Number of Periods You've been offered an investment that will pay you 7 percent per…

A: We know, Future value = Present value x (1+r) ^ t where, r= periodic interest rate t = number of…

Q: If an investment advisor promises to double your money in 6 years, she is promising an annual rate…

A: Using the following formula we can compute annual rate of return.Future Value (FV) = Present Value…

Q: An investment will pay you $4,611.9 in 3 years if you pay $1,376.68 today. What is the implied rate…

A: Rate of return = (Future value / Present value)^(1/Time) - 1 where, Future value = $4,611.9 Present…

Q: Use logarithms to solve the problem. How long will it take an investment of $7000 to triple if the…

A: Future Value = Present Value (1 + g)n

Q: Use logarithms to solve the problem. How long will it take $11,000 to grow to $19,000 if the…

A: Compound = monthly = 12 Present value = pv = $11,000 Future value = fv = $19,000 Interest rate = r =…

Q: Double your money-Rule of 72 Approximately how long will it take to double your money if you get an…

A: The Rule of 72 is a simple way to determine how long an investment will take to double given a fixed…

Q: Consider an investment which pays 1.05 times your original payment (which is not returned) after two…

A: The return on any investment is given by R = (F - P)/P * 12/n Where P = value invested F = value…

Q: You have two investment opportunities. The interest rate for both investments is 8%. Interest on the…

A: Lets understand the basics.Compounding is known as a number of times amount gets compounded once…

Q: An investment pays simple interest, and triples in 14 years. What is the interest rate?

A: The sum of money that is charged or gained for the usage of money is known as interest, and it is…

Q: An investment promises two payments of 650 on dates two and four months from today if the required…

A: The present value is the current value of future cash flows. Investors and money lenders use this…

Q: You invest $10,000 into a money market account that pays interest on a semi-annual basis (e.g.,…

A: We use NPER function in excel by taking present value as 10000 and future value as 20000 and…

Q: If the interest rate is 5%, then the capitalized value of an investment that would be $ pays $8 per…

A: The capitalized value of an investment is the present value of the stream of income that the…

Q: A project will double your investment in one year with probability 0.58, otherwise you'll lose half…

A: Standard deviation of stock is computed as follows:-Standard deviation of stock = whereR= returnER=…

Q: Approximately how long will it take to double your money if you get an annual return of 3.3%,…

A: Time for Investment double = 72/ rate of return

Q: If a particular investment will pay $500, 5 months from now, and an additional $500, 9 months from…

A: Present value of future amount is computed as follows:-PV= wherePV= present valueFV = future valuer=…

Q: An investment pays $40 annually, forever, starting 8 years from now (at t=8). The effective annual…

A: The present value is the present worth of the amount that will be paid or received in the future.

Q: you put $200 per month in an investment plan that pays an APR of 2.5% How many will you have after…

A: An annuity is a type of financial contract intended to give someone a steady stream of income…

Q: Suppose you save $2,800 ayear for 43 years into an investment account that earns 8.5% return, how…

A: Yearly savings = $2800Period = 43 yearsInterest rate = 8.5%

Q: the rule of 72

A: Given information : Initial investment = $100 Interest rate = 7%

Q: A person who invests $1,000 each year finds one choice that is expected to pay 4 percent per year…

A: Future Value (FV) is the value of an asset at a future date, given a specified rate of return. It…

Q: You are 19 years old today. You want to have $381,507.06 in an investment acce when you are 60 years…

A: Future value of money include the growth of money and interest also. so future value become…

Q: Approximately (using the Rule of 72), how many years will it take to double a $3000 investment when…

A: The Rule fo 72 is a model which helps in knowing the number of years it will take to double the…

Q: Double your money-Rule of 72. Approximately how long will it take to double your money if you get an…

A: The Rule of 72: It is a simple formula for determining how long an investment will take to double in…

Q: You have $68,513 you want to invest. You are offered an investment plan that will pay you 4.58…

A: Annual rate refers to the interest rate that is earned over the investment amount by the investors…

Q: (Solving for n with nonannual periods) About how many years would it take for your investment to…

A: We require to calculate the the number of years that make the investment twofold i.e. two times.…

Q: (Solving for n with nonannual periods) About how many years would it take for your investment to…

A: In the given question we require to calculate the the number of years that make the investment…

Concept explainers

Types of Insurance Contract

Insurance is a contract wherein an individual or entity gets financial protection from the insurance company for any damages or losses incurred. The individual or entity is called the insured, whereas the insurance company is called the insurer. The insured and the insurer enter a legal contract for a fixed term called the insurance term, and the contract is called an insurance policy.

Question

If you have an investment that is earning 5.5% annually, use the Rule of 72 to estimate how many
years it will take for your investment to double.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Consider an investment which pays 1.05 times your original payment (which is not returned) after two months. Find the annualised rate of return of this investment. Your answer should be a percentage, but do not enter the 9% sign. For example, it your answer is 75, enter 75. Answer:
You have two investment opportunities. The interest rate for both investments is 8%. Interest on the first investment will compound annually, while interest on the second will compound quarterly. Which investment opportunity should you choose? Why?.
If money is invested at 6% per year, after approximately how many years will the interest earned be equal to the original investment?
If you want to save $50,000 in 8 years, you will earn 6.5% on your investment. a. How much will your payments be annually? b. Identify N, PV, FV, PMT, and I/R, and the formula used to calculate the payment.
Assuming an annual rate of return of 9.5% and depositing $3,000 at the end of every 6 months into your investment account, how much will you have after 30 years?
What is the value of today of an investment that will pay $100 per year for 5 years. Assume first payment is made 1 year from today and the interest rate is 7%?
Suppose you invest $385 at the end of each of the next eight years. (a) If your opportunity cost rate is 7 % compounded annually, how much will your investment be worth after the last $385 payment is made? (b) What will be the ending amount if the payments are made at the beginning of each year?
If you pay $500 for an investment that returns $600 in 1 year, whatis your annual rate of return? (20%)
An investment opportunity requires a payment of $750 for 12 years, starting a year from today. If your required rate of return is 8 percent, what is the value of the investment to you today?
Consider an investment which pays $2,000 at the end of year 1, year 2, and year 3. In year 4, the investment will pay $5,000 and this payment will grow by 4.3% each year forever. If the appropriate interest rate is 7%, what is this investment worth today?
Suppose an investment earns 2.5% interest compounded continuously. Find the future value of a $3400 investment after 23years. Round your answer to the nearest cent, if necessary.
You put $300 per month in an investment plan that pays an APR of 2.5%. How much money will you have after 22 years? Compare this amount to the total deposits made over the period.