A23 Unknown Time

Question 1

what is the method of equated time?

Answer 1

Approximates the time where a bunch of cashflows at different times were to be replaced with a single cashflow at a single point in time.

Eqn: t bar = (s_1 * t_1 + s_2 * t_2 + … + s_n * t_n)/(s_1 + s_2 + … + s_n)

Question 2

what is the rule of 72?

Answer 2

it gives an approximate value for the number of periods required for an investment to double at a given interest rate.

Eqn: n ≈ 0.72/i