How to Use the Rule of
Let R x T = 72, where R = the rate of growth (for example, the interest rate), T = doubling time (in years) (for example, the time it takes to double an amount of money)., Insert a value for R. For example, how long does it take to turn $100 into...
Step-by-Step Guide
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Step 1: Let R x T = 72
Letting R = 5, we get 5 x T =
72. , In this example, divide both sides of the above equation by R (that is, 5) to get T = 72 ÷ 5 =
14.4.
So it takes
14.4 years to double $100 to $200 at an interest rate of 5% per annum. (The initial amount of money doesn't matter.
It will take the same amount of time to double no matter what the beginning amount is.) , Let 10 x T = 72, so that T =
7.2 years.
How long does it take to turn $100 into $1600 at a rate of
7.2% per annum? Recognize that 100 must double four times to reach 1600 ($100 → $200, $200 → $400, $400 → $800, $800 → $1600).
For each doubling,
7.2 x T = 72, so T =
10.
So as each doubling takes ten years, the total time required (to multiply $100 by 16) is 40 years. ,, What interest rate would you need in order to do that? Enter 10 for T in the equation.
R x 10 =
72. , So you will need an annual interest rate of
7.2% in order to double your money in ten years. -
Step 2: where R = the rate of growth (for example
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Step 3: the interest rate)
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Step 4: T = doubling time (in years) (for example
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Step 5: the time it takes to double an amount of money).
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Step 6: Insert a value for R. For example
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Step 7: how long does it take to turn $100 into $200 at a yearly interest rate of 5%?
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Step 8: Solve for the unknown variable.
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Step 9: Study these additional examples: How long does it take to double an amount of money at a rate of 10% per annum?
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Step 10: Let R x T = 72
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Step 11: where R is the rate of growth (in these examples it's the interest rate)
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Step 12: and T is the time it takes to double any amount of money.
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Step 13: Enter the value of T. For example
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Step 14: let's say you want to double your money in ten years.
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Step 15: Solve for R. Divide both sides by 10 to get R = 72 ÷ 10 = 7.2.
Detailed Guide
Letting R = 5, we get 5 x T =
72. , In this example, divide both sides of the above equation by R (that is, 5) to get T = 72 ÷ 5 =
14.4.
So it takes
14.4 years to double $100 to $200 at an interest rate of 5% per annum. (The initial amount of money doesn't matter.
It will take the same amount of time to double no matter what the beginning amount is.) , Let 10 x T = 72, so that T =
7.2 years.
How long does it take to turn $100 into $1600 at a rate of
7.2% per annum? Recognize that 100 must double four times to reach 1600 ($100 → $200, $200 → $400, $400 → $800, $800 → $1600).
For each doubling,
7.2 x T = 72, so T =
10.
So as each doubling takes ten years, the total time required (to multiply $100 by 16) is 40 years. ,, What interest rate would you need in order to do that? Enter 10 for T in the equation.
R x 10 =
72. , So you will need an annual interest rate of
7.2% in order to double your money in ten years.
About the Author
Jacqueline Lane
Specializes in breaking down complex DIY projects topics into simple steps.
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