
02336008
j
2000f.04345
Smith, Will
The 72 rule and other approximate rules of compound interest.
Parabola 36, No. 1, 715 (2000).
2000
AMT Publishing, Australian Mathematics Trust, University of Canberra, Canberra; School of Mathematics \& Statistics, University of New South Wales, Sydney
EN
F80
There is a simple approximate rule of thumb used by investors and accountants to estimate the time taken in years, $n$, for an investment to double with an interest rate of $R\%$, or indeed for a debt to double if left unpaid. One simply divides 72 by $R$ to estimate the time in years. The rule is known as ``Rule 72'' or ``the 72 Rule'' and is often attributed to the investment advisor Henri Aram who popularized it. This rule and a more accurate approximation are derived and discussed.