### Rule of 72

The rule of 72 is a method of estimating the number of years that are required to double the amount of and investment at a given compound interest rate.

Compounding Interest is re-investing the interest back into the investment and receiving interest on the re-invested interest amounts in the following time periods (years).

#### Examples

How long will is required to double an investment of \$1000 invested at 4% compounded annually?

72 ÷ 4 = 18 years

It will take about 18 years to double the investment at an annual compound interest rate of 4%.

#### Exercise #1

Create a spreadsheet that demonstrates the rule of 72.

You can follow the above layout
• all shaded cells are formulas
• if you change the Amount of Investment or the Yearly Interest Rate the entire spreadsheet will change
• you will need to copy the formulas down for the correct Doubling Time periods
• you do not need to shade the cells
• WARNING:
• The rule of 72 requires the interest rate to be expressed as a percent i.e. 4 for 4%
• The interest Calculations requires the interest rate to be expressed as a decimal value. i.e. 0.04 for 4%

Spreadsheet programs, including Google Sheets, allow for one file to hold multiple sheets

 Case Investment Interest Rate 1 \$ 10,000 7.2% 2 5,000 6.5% 3 450 2.25% 4 1,750 3.75% 5 200,000 10%

Note: Copy and Pasting also works between sheets
• to add an new sheet, press the big + icon on the bottom RHS of the window
• If you set your sheets up correctly, only the interest rates and investment amounts need to be changed on your sheet
• You will need to adjust the number of rows required to match the doubling time
• some formulas will required absolute cell addressing
Right click on the sheet tab and a sheet can be:
• duplicated
• renamed
• deleted
• ... and more
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