All you do is divide 72 by the fixed rate of return to get the number of years it will take for your initial investment to double. You would need to earn 10% per year to double your money in a little over seven years.
1 At 10%, you could double your initial investment every seven years (72 divided by 10). In a less-risky investment such as bonds, which have averaged a return of about 5% to 6% over the same period, you could expect to double your money in about 12 years (72 divided by 6).
Given a 10% annual rate of return, how long will it take for your money to double? Take 72 and divide it by 10 and you get 7.2. This means, at a 10% fixed annual rate of return, your money doubles every 7 years.
If a sum doubles itself in 5 years by simple interest. Calculations: Let P be the principal amount and R be the rate of interest. ∴ The rate of simple interest p.a. is 20%.
Therefore, the annual rate of interest, compounded annually, that doubles an investment in 7 years is approximately 0.104090 or 10.4090%. The annual rate of interest, compounded annually, that doubles an investment in 7 years is approximately 10.4090%.
How the Rule of 72 Works. For example, the Rule of 72 states that $1 invested at an annual fixed interest rate of 10% would take 7.2 years ((72 ÷ 10) = 7.2) to grow to $2. In reality, a 10% investment will take 7.3 years to double (1.107.3 = 2).
If a sum doubles itself in 5 years by simple interest. Calculations: Let P be the principal amount and R be the rate of interest. ∴ The rate of simple interest p.a. is 20%.
Rate of interest = 8.33 % if A sum of money doubles itself in 12 years. Learn more: find the simple interest when rate is 5% half yearly for 2.5 years ... The simple interest on a sum for 5 years is 2/5 of the sum.
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