The Rule of 70 States That the Level of a Variable

question 8

Multiple Choice

The Rule of 70 states that the level of a variable will double in

• A)70 years.
• B)the number of years equal to the variable's annual rate of growth divided by 70.
• C)the number of years equal to 70 divided by the variable's annual growth rate.
• D)the number of years equal to the variable's annual growth rate minus 70.
• E)the number of years equal to 70 multiplied by the variable's annual growth rate expressed as a decimal.

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Definitions:

WACC

Weighted Average Cost of Capital; a measure used to calculate the average cost of a company's financing sources, including equity and debt.

NPV

Net Present Value; a calculation that compares the present value of cash inflows with the present value of cash outflows over a period of time to assess profitability.

Cash Flow

The total amount of money being transferred into and out of a business, particularly affecting liquidity.

Cost Of Capital

The return rate that a company must earn on its investment projects to maintain its market value and attract funds.