Applying a little bit of algebra we can rearrange the rule of 72 equation to calculate the number of years required to double your money with a given interest rate compounded annually. It doubles about 2 33 times.
In mathematics the logarithm is the opposite concept of a power.
Rule of 72 worksheet answers. According to the rule of 72 how often will an individuals investment double. Bryce invested 30 000 in his employee sponsored retirement account when he was 23 years old. He is now 65 years old and ready to retire.
What is the value at age 65. Let s look at an example. Rule of 72 math answer key date class directions.
The rule of 72 and natural logs the rule of 72 can estimate compounding periods using natural logarithms. When solved the rule of 72 in finance calculates the exact number of periods typically days in which you can triple your money at a certain interest rate. For example the opposite.
When solved the rule of 72 in finance. The rule of 72 only applies to compound interest not to simple interest calculations. Use the rule of 72 to answer the following questions.
Bryce invested 30 000 in his employee sponsored retirement account when he was 23 years old. The rule of 72 formula is calculated by multiplying the investment interest rate by the number of years invested with the product always equal to 72. Divide the rule number 72 by the annual interest rate r to nd out the approximate time t required for doubling.
When the rate of return that you have earned multiplied by the number of years invested equals seventy two then your money has doubled. Rule of 72 worksheet free printable reading with questions for grade 7 12 economics pdf file. Use the rule of 72 to answer the following questions.
What is the value at age 65. 72 11 6 5 years 3. If he earned an average of 4 on the account how many times did it double.
Jessica has a balance of 2 200 on her credit card with an 18 0 interest rate. He is now 65 years old and ready to retire. 72 6 interest 12 years 72 10 years 7 2 interest students will need the internet to complete the first two columns of the activity.
Compound interest means earning interest on your interest you can use the ruleof 72. Rule of 72 by kent eberspacher teacher wyoming teacher directions go over the rule of 72 and do a few sample problems. The rule of 72 is an easy way for you to discover how long it will take your money to double using compounded interest.
If he earned an average of 4 on the account how many times did it double.