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Case Problem Blank

# Case Problem Blank - ..Follow thisformat:citetheformula,,...

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Answer the following questions. Be sure to show all your work- not just the answer. Follow  this format: cite the formula, and then plug in numbers, then compute to show your final  answer. Q1 through 10 are worth 4 points each; Q11a, Q11b, Q12, and Q13 are worth 15 points  each. Be sure to solve according to the method that is requested. 1. What is the Rule of 72? The 'Rule of 72' is a simplified way to determine how long an investment will take to  double, given a fixed annual rate of interest. By dividing 72 by the annual rate of return,  investors  can  get a  rough  estimate of  how  many  years  it   will take  for the  initial  investment to duplicate itself.  2. Solve using the Rule of 72: rate = 8%, years = 18, pv = \$7,000. Solve for fv. 72  ÷  8% = 9 Years to Double Investment \$7,000 * 2 (at 9 years) * 2 (at 18 Years) = \$28,000 FV = \$28,000 3. Solve, using the Rule of 72 rate = 4%, years = 18, fv=\$8,000. Solve for pv. 72  ÷  4% = 18 Years to Double Investment \$8,000  ÷  2 (at 18 Years) = \$4,000 PV = \$4,000 4. Solve, using the Rule of 72: rate =6%, pv=\$7,000, fv= \$56,000. Solve for years. 72  ÷  6% = 12 Years to Double Investment \$56,000  ÷  2 (at 12 Years)  ÷  2 (at 24 years)  ÷  2 (at 36 years) = \$7,000 Years = 36 5. Solve, using the Rule of 72: pv=\$10,000; fv=\$160,000; years=10. Solve for rate.

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