Rule+of+72

Rule of 72- The rule says that to find the number of years required to double your money at a given interest rate, you just divide the interest rate into 72. For example, if you want to know how long it will take to double your money at 4%, than divide 4 into 72 (72/4) and you get 18. This rules apply to [|exponential growth] and are therefore used for [|compound interest] as opposed to [|simple interest] calculations. The '[|Rule of 72]' is a simplified way to determine how long an investment will take to double, given a fixed annual rate of interest. The Rule of 72 is a great [|mental math shortcut] to estimate the effect of any growth rate, from quick financial calculations to population estimates. Here’s the formula:

Years to double = 72 / Interest Rate You can also use the rule of 72 for **expenses like inflation or interest**: -If inflation rates go from 2% to 3%, your money will lose half its value in 36 or 24 years. -If college tuition increases at 5% per year (which is faster than inflation), tuition costs will double in 72/5 or about 14.4 years. If you pay 15% interest on your credit cards, the amount you owe will **double** in only 72/15 or 4.8 years. Multiple Choice question: How would you find out how long will it take to double your money at 9%? a) 72+9=81 years b) 72-9= 63 years C) 72/ 9 = 8 years d) 9/ 72