The Rule of 72 Is an Estimate of How Long

question 1

True/False

The Rule of 72 is an estimate of how long it would take to double a sum of money at a given interest rate.

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Definitions:

Salvage Value

The estimated residual value of an asset after it has been fully depreciated and is no longer in use.

Straight-line Method

A technique that evenly distributes the expense of an asset across its lifespan for depreciation calculation.

Discounted Payback

The period it takes for an investment to break even in cash flow terms, adjusted for the time value of money.

Required Return

The minimum gain or profit that investors expect to receive on an investment relative to its risk.