A firm's net income last year was $1.5 million. Its net income grew 5 percent during the last "5" years. If that growth rate continues, how long will it take for the firm's net income to double?
A) 7.6 years
B) 10.47 years
C) 14.21 years
D) 14.55 years

Question

Quizplus · Accepted Answer

To find how long it will take for the firm's net income to double, we use the Rule of 72, which is a simple way to estimate the number of years required to double the investment at a fixed annual rate of interest. Divide 72 by the annual growth rate: 72 / 5 = 14.4 years. The closest option is 14.21 years.

A Firm's Net Income Last Year Was $1