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To estimate the number of periods required to double an original investment, divide the most convenient "rule-quantity" by the expected growth rate, expressed as a percentage. For instance, if you were to invest $100 with compounding interest at a rate of 9% per annum, the rule of 72 gives 72/9 = 8 years required for the investment to be worth ...
The notion of doubling time dates to interest on loans in Babylonian mathematics. Clay tablets from circa 2000 BCE include the exercise "Given an interest rate of 1/60 per month (no compounding), come the doubling time." This yields an annual interest rate of 12/60 = 20%, and hence a doubling time of 100% growth/20% growth per year = 5 years.
For example, compounding at an annual interest rate of 6 percent, it will take 72/6 = 12 years for the money to double. The rule provides a good indication for interest rates up to 10%. In the case of an interest rate of 18 percent, the rule of 72 predicts that money will double after 72/18 = 4 years.
Say you have $10,000 in credit card debt at 20% APR. It would take you 60 months (or five years) of $266.67 monthly payments to pay off the balance, and you’d end up paying $5,823.55 in interest ...
It gives the interest on 100 lire, for rates from 1% to 8%, for up to 20 years. [3] The Summa de arithmetica of Luca Pacioli (1494) gives the Rule of 72, stating that to find the number of years for an investment at compound interest to double, one should divide the interest rate into 72.
Savings interest rates today: Ring in the new year with APYs of up to 5.05% (that's 10x the national average) — Dec. 31, 2024 Kelly Suzan Waggoner Updated December 31, 2024 at 8:20 AM
Final Take To GO. As of 2023, the national average deposit rate for savings accounts is 0.42%, according to data from the FDIC. That doesn’t mean you have to settle for average, in fact, you can ...
The after-tax rate of return is calculated by multiplying the rate of return by the tax rate, then subtracting that percentage from the rate of return. A return of 5% taxed at 15% gives an after-tax return of 4.25%; 0.05 x 0.15 = 0.0075 0.05 − 0.0075 = 0.0425 = 4.25%. A return of 10% taxed at 25% gives an after-tax return of 7.5%; 0.10 x 0.25 ...