MINDTAP FINANCE FOR GARMAN/FORGUE'S PER
MINDTAP FINANCE FOR GARMAN/FORGUE'S PER
13th Edition
ISBN: 9781337288347
Author: FORGUE
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 1, Problem 8DTM
Summary Introduction

To calculate:The number of years to double the money.

Introduction:Rule of 72 is one of the direct rules of finance to find the time period to double the money invested. As per this rule, one can calculate the estimated number of years in which money can be doubled. According to this, 72 numbers is divided by the interest rate number to find the number of years to double the money.

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Using the Rule of 72, calculate howquickly $1,000 will double to $2,000 at interest rates of2 percent, 4 percent, 6 percent, 8 percent, and 10 percent.
In your own words, explain how compounding works. According to the rule of 72, if you deposit $100 in an account that pays 9% compound interest, how long will it take that initial deposit to reach $200? Use the matrix given below. For each type of investment, record this information: • Is the risk high, moderate, or low? • Is the return high, moderate, or low? • How does this type of investment work? Explain in one or two sentences.
If the annual interest rate is 8%, what is the daily interest rate that would be used as the "r" in the time value of money equation? Hint: the equation uses the decimal equivalent of the percent Enter your answer to four decimal places.
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