How to use financial rule 72

The rule of 72 is used to calculate over what period of time the money is invested at interest in the Bank, will be twice more.

This tutorial will teach You how to use this simple and useful rule.

Instruction

Difficulty level: Easy

step 1

Here is a formula which allows to calculate the time for which Your money to double.: R*T=72, where R is the interest rate, and T is the time in which You invested amount to double.

2 step

Let Your interest rate is 10 % per year. 10 % is the value of R. We will substitute our formula is R, we get:

10*T=72, hence T=72/10=7.2 for. Means amount of money deposited by you will be doubled over 7.2 years.

3 step

In order to calculate what percentage you need to put money so that after a certain period of time the amount has been doubled, so you can use this formula.

For example, if You want Your amount has doubled in 2 years, instead of T, you should specify a value of 2. R*2=72, hence R=72/2=36. That is to ensure that our sum has doubled in two years, you need to put the amount at 36% per year.(Unfortunately, in our banks such interest does not happen, but for example's sake.)

step 4

This rule instead of the number 72 is also used figure 69 (69 gives a more accurate result, but makes it difficult to count.)

5 step

And here's an example using this formula on the graph: http://image2you. ru/30476/740596/

If You need a calculator, I advise this: Calculator