The Rule of 72 Introduction: Present value refers to the current worth of the future cash inflows after discounting with a discount rate. The present value helps to understand the amount that needs to be invested at present to obtain a predetermined amount of future cash flow. The basic present value equation is as follows: PV = FV ( 1 + r ) t Where, “PV” refers to the present value of future cash flow “FV” refers to the cash flow “r” refers to the discount rate “t” refers to the number of years or periods of investment

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Answer 1

Question

Chapter 5.3, Problem 5.3BCQ

Summary Introduction

To discuss: The Rule of 72

Introduction:

Present value refers to the current worth of the future cash inflows after discounting with a discount rate. The present value helps to understand the amount that needs to be invested at present to obtain a predetermined amount of future cash flow. The basic present value equation is as follows:

PV=FV(1+r)t

Where,

“PV” refers to the present value of future cash flow

“FV” refers to the cash flow

“r” refers to the discount rate

“t” refers to the number of years or periods of investment

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Answer 2

Question

Chapter 5.3, Problem 5.3BCQ

Summary Introduction

To discuss: The Rule of 72

Introduction:

Present value refers to the current worth of the future cash inflows after discounting with a discount rate. The present value helps to understand the amount that needs to be invested at present to obtain a predetermined amount of future cash flow. The basic present value equation is as follows:

PV=FV(1+r)t

Where,

“PV” refers to the present value of future cash flow

“FV” refers to the cash flow

“r” refers to the discount rate

“t” refers to the number of years or periods of investment

Expert Solution & Answer

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Answer 3

Question

Chapter 5.3, Problem 5.3BCQ

Summary Introduction

To discuss: The Rule of 72

Introduction:

Present value refers to the current worth of the future cash inflows after discounting with a discount rate. The present value helps to understand the amount that needs to be invested at present to obtain a predetermined amount of future cash flow. The basic present value equation is as follows:

PV=FV(1+r)t

Where,

“PV” refers to the present value of future cash flow

“FV” refers to the cash flow

“r” refers to the discount rate

“t” refers to the number of years or periods of investment

Expert Solution & Answer

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Answer 4

Question

Chapter 5.3, Problem 5.3BCQ

Summary Introduction

To discuss: The Rule of 72

Introduction:

Present value refers to the current worth of the future cash inflows after discounting with a discount rate. The present value helps to understand the amount that needs to be invested at present to obtain a predetermined amount of future cash flow. The basic present value equation is as follows:

PV=FV(1+r)t

Where,

“PV” refers to the present value of future cash flow

“FV” refers to the cash flow

“r” refers to the discount rate

“t” refers to the number of years or periods of investment

Expert Solution & Answer

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Answer 5

Chapter 5.3, Problem 5.3BCQ

Summary Introduction

To discuss: The Rule of 72

Introduction:

Present value refers to the current worth of the future cash inflows after discounting with a discount rate. The present value helps to understand the amount that needs to be invested at present to obtain a predetermined amount of future cash flow. The basic present value equation is as follows:

PV=FV(1+r)t

Where,

“PV” refers to the present value of future cash flow

“FV” refers to the cash flow

“r” refers to the discount rate

“t” refers to the number of years or periods of investment

Answer 6

Chapter 5.3, Problem 5.3BCQ

Summary Introduction

To discuss: The Rule of 72

Introduction:

Present value refers to the current worth of the future cash inflows after discounting with a discount rate. The present value helps to understand the amount that needs to be invested at present to obtain a predetermined amount of future cash flow. The basic present value equation is as follows:

PV=FV(1+r)t

Where,

“PV” refers to the present value of future cash flow

“FV” refers to the cash flow

“r” refers to the discount rate

“t” refers to the number of years or periods of investment

Answer 7

Chapter 5.3, Problem 5.3BCQ

Summary Introduction

To discuss: The Rule of 72

Introduction:

Present value refers to the current worth of the future cash inflows after discounting with a discount rate. The present value helps to understand the amount that needs to be invested at present to obtain a predetermined amount of future cash flow. The basic present value equation is as follows:

PV=FV(1+r)t

Where,

“PV” refers to the present value of future cash flow

“FV” refers to the cash flow

“r” refers to the discount rate

“t” refers to the number of years or periods of investment

Answer 8

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Answer 9

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Answer 10

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Answer 11

Ch. 5.1 - Prob. 5.1ACQ Ch. 5.1 - Prob. 5.1BCQ Ch. 5.1 - Prob. 5.1CCQ Ch. 5.2 - Prob. 5.2ACQ Ch. 5.2 - Prob. 5.2BCQ Ch. 5.2 - What do we mean by discounted cash flow, or DCF,...Ch. 5.2 - Prob. 5.2DCQ Ch. 5.3 - Prob. 5.3ACQ Ch. 5.3 - Prob. 5.3BCQ Ch. 5 - You deposited 2,000 in a bank account that pays 5...

Solution Summary: The author explains the "Rule of 72" which states that the time required to double the investment is approximately 72 divided by r%(discount rate).

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