If Inflation Is Increasing at 3 Percent Per Year,and Your

question 26

Multiple Choice

If inflation is increasing at 3 percent per year,and your salary increases at the same rate,how long will it take your salary to double?

• A)30 years
• B)24 years
• C)18 years
• D)12 years
• E)6 years Rule of 72: 72/3 = 24

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Definitions:

Financial Leverage

The use of borrowed funds to increase the potential return on an investment.

Shareholder Leverage

The use of borrowed funds by shareholders to increase their potential returns from an investment.

Operating Leverage

A measure of how revenue growth translates into growth in operating income due to fixed costs in a company's business model.

Tax Rate

The percentage at which an individual or corporation is taxed by the government on their income or profits.