When investing in anything, the investor always wants to know “when do I get my money back?”. This question elicits the following math problem:
Given an interest rate i, when will my principle P double in value (that is, I have made my money back)?
First off, this question is not quite well defined – we are not told how often the interest is compounded (or if it is compounded), but we will work with that.
The rule of 72 is a very convenient little trick for those interested in this rule. The rule states:
Divide 72 by the interest rate. This will …
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