Doubling period, Financial Accounting

Assignment Help:

One of the initial and the most general questions regarding an investment optional is the time period needed to double the investment. One clear way is to consider to the table of compound factor from that this period can be computed.  For illustration the doubling period at 3 percent, 4 percent, 5 percent, 6 percent, 7 percent, 8 percent, 9 percent, 10 percent, 12 percent would be approximately 23 years, 18 years, 14 years, 12 years, 10 years, 9 years, 8 years, 7 years, and 6 years correspondingly.

If one is not inclined to utilize future value interest factor tables there is an option, termed as rule of 72. As per to this rule of thumb the doubling period is acquired by dividing 72 through the interest rate.  For illustration, at the interest rate of 8 percent the approximate time for doubling an amount would be as 72/8 = 9 years.

A vary accurate rule of thumb is rule of 69. According to this rule the doubling period is equivalent to:

.35 + (69/ Interest rate)

By using this rule the doubling period used for an amount fetching 10 % and 15% interest would be as given:

35 +  69/10 = .35 + 6.9 = 7.25 years

35 +  69/15 =.35 + 4.6 = 4.95 years


Related Discussions:- Doubling period

measure the initial investment outlay, Home Inc. is considering buying a n...

Home Inc. is considering buying a new piece of equipment, which will cost $715,000 and has an economic life of 5 years, in order to make a new line of product.  The company suppose

Objective type question, 1 The entry establishing a $175 petty cash fund wo...

1 The entry establishing a $175 petty cash fund would include a: a) debit to cash for $175 b) credit to Petty cash for $175 c) debit to petty cash for $175 d) debit to miscellaneou

Profits in subsidiary company-group accounts, Profits in subsidiary company...

Profits in subsidiary company The remaining profits that belong to the holding company should be split between pre-acquisition profits and post acquisition profits. The pre

Financial managment, How is a company’s cost of capital affected by its tax...

How is a company’s cost of capital affected by its tax rate?

Calculate pv of cash flows, Q. Calculate PV of cash flows? Estimat...

Q. Calculate PV of cash flows? Estimated market value                                              $116·26 per $100 of debentures The value of 45 shares in 5 years' tim

Explain final location survey, Q. Explain Final Location Survey? A fina...

Q. Explain Final Location Survey? A final Location Survey is under taken on the completion of traffic survey to select the final rout of the line to be constructed, taking into

Calculate the capital investment - time value money, Q. The capital invest...

Q. The capital investment appraisal techniques such as NPV, IRR, ARR, PV and Time value of money have become irrelevant post Celtic Tiger. Due to the depth of the recession comp

Use net present value and payback period method, Given the following cash f...

Given the following cash flows for projects A and B:   Year      Project A   Project B     0       -100,000     -150,000   (Project Cost)     1         25,000

Objectives of time value of money, After going through this section, you mu...

After going through this section, you must be capable to: -          Identify the time value of money; -          Know what gives money its time value; -          Identify

Explain in detail about the sole proprietorship, Explain in detail about th...

Explain in detail about the Sole proprietorship Sole proprietorship, as the name suggests, is where an individual is the sole owner of a business. This type of business is ofte

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd