Which of the following statements about the Rule of 72 is not true?
A) It is a mathematical approximation for the number of years required to double an investment.
B) It illustrates the power of a discounted rate.
C) It can be used to approximate the interest rate needed to double an investment for a specified amount of time.
D) None of the above.

Question

Quizplus · Accepted Answer

The Rule of 72 is used to estimate the number of years required to double an investment with a fixed annual rate of return or to estimate the annual rate of return needed to double an investment in a certain number of years. It does not directly relate to illustrating the power of a discounted rate, which involves reducing the value of future cash flows to present value, a concept more closely associated with discounted cash flow (DCF) analysis.

Which of the Following Statements About the Rule of 72