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Rule of 69 definition

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Related Courses Corporate Finance Essentials of Business Math Financial Analysis What is the Rule of 69? The Rule of 69 is used to estimate the amount of time it will take for an investment to double, assuming continuously compounded interest. to the result.

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Opportunity cost of capital definition

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Related Courses Capital Budgeting Corporate Finance Financial Analysis What is the Opportunity Cost of Capital? The opportunity cost of capital is the incremental return on investment that a business foregoes when it elects to use funds for an internal project, rather than investing cash in a marketable security.

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The Rule of 72 definition

Accounting Tools

years) Related AccountingTools Courses Corporate Finance Essentials of Business Math Financial Analysis The Rule of 72 is fairly accurate for low rates of return, and becomes increasingly inaccurate when higher rates of return are incorporated into the calculation. 72 ÷ 1 = 72.0 years) 2% interest rate. (72 72 ÷ 2 = 36.0

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Annualized rate definition

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Related Courses Corporate Finance Financial Analysis What is the Annualized Rate? The annualized rate is the computed amount of return that would be realized if a short-term investment were to be extrapolated for a period of one year.

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Financial leverage definition

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Related Courses Corporate Finance The Interpretation of Financial Statements Treasurer's Guidebook What is Financial Leverage? Financial leverage is the use of debt to buy more assets. However, an excessive amount of financial leverage increases the risk of failure, since it becomes more difficult to repay debt.

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Simple rate of return definition

Accounting Tools

Related Courses Capital Budgeting Corporate Finance Treasurer's Guidebook What is the Simple Rate of Return? The simple rate of return is used for capital budgeting analysis, to determine whether a business should invest in a fixed asset and any incremental change in working capital associated with the asset.

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Reverse leverage definition

Accounting Tools

Related AccountingTools Courses Corporate Finance Financial Analysis The Interpretation of Financial Statements Related Article Leverage Ratios After one year, he finds that the actual net after-tax return on his purchase of the manufacturing company is just 3%.