Difference between revisions of "Rule of 72"
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| − | The '''Rule of 72''' is used to estimate [[Interest|compound interest]], specifically how long it takes money to double under a given interest rate. The number 72 is placed into the [[ | + | The '''Rule of 72''' is used to estimate [[Interest|compound interest]], specifically how long it takes money to double under a given interest rate. The number 72 is placed into the [[numerator]] and the rate of interest in the [[denominator]]. The quotient is the number of years needed for the money to double, up to a small [[rounding error]]. |
[[Category:Finance]] | [[Category:Finance]] | ||
[[Category:Mathematics]] | [[Category:Mathematics]] | ||
Revision as of 18:46, July 13, 2016
The Rule of 72 is used to estimate compound interest, specifically how long it takes money to double under a given interest rate. The number 72 is placed into the numerator and the rate of interest in the denominator. The quotient is the number of years needed for the money to double, up to a small rounding error.