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Rule 72 : A Simple Method To Estimate Growth

Written By Sambasivarao on Wednesday, September 26, 2012 | Wednesday, September 26, 2012

Rule of 72

If you wanna know how it works then let us take an example for it. Suppose you are going to invest Rs. 100 in an investment which gives you interest of 10% per annum. Now we are required to calculate in how many years does our investment become double.
Time (T) = 72 / Rate of return (R)
  • If your economy is growing at the rate of 8% then in how many years it will become double, then use 72/8=9, so in 9 years your economy will become double of what is it today.
  • Suppose your population is increase at the rate of 4% then it will take 18 years (72/4) to become double.

Here T is Time Period and r is rate of Return. So 72/10 = 7.2 years. So it means if you invest Rs.100 then it will become Rs. 200 in 7.2 years (approx).
While using this method you must note that this formula is derived for calculating short period investments, so as short is the period of invest as accurate your answer will be.
Well this method is not only used in calculating investment doubling time period but rather you can use this formula on anything which tends to grow. Suppose :-
You wanna know :-
So you can use this formula on anything which is growing in nature. Just divide 72 with rate at which its increasing and you will get your result.
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