Question

Define the rule of 72. please provide an example to futher explain your answer

Answer 1

The rule of 72 is a mathematical shortcut used to estimate the time it will take for a system or collection to double in size. It is calculated by dividing 72 by the annual growth rate. This rule provides a quick way to estimate doubling time for different growth rates.

Step-by-step explanation:

The rule of 72 is a mathematical shortcut used to estimate the time it will take for a system or collection to double in size. To apply the rule of 72, divide 72 by the annual growth rate. The result will give you an approximation of the number of years it will take for the system or collection to double.

For example, let's say we have an investment that is growing at an annual rate of 8%. By dividing 72 by 8, we find that it will take approximately 9 years for the investment to double in value.

So, the rule of 72 allows us to quickly estimate the doubling time for various growth rates.

Answer 2

The rule of 72 is where you divide 72 over the interest rate when you delete the percent sign (do not use the decimal form of the interest rate). Doing so will give an approximate timeline when your money would double.

• Example: You deposit money into an account with 4% interest rate. Using the rule of 72, it would take about 18 months for the money to double because 72/4 = 18.
• Another example: It takes approximately 9 months for money to double if you invest at 8%. This is because 72/8 = 9.

Keep in mind that the result is an approximation. Notice how the starting deposit amounts do not affect the doubling time.