# Rule of 72

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```					        Rule of 72

Going on beyond doubling your
money.
Albert Einstein

Credited for discovering
the mathematical equation
for compounding interest,
thus the “Rule of 72”

“It is the greatest
mathematical discovery of
all time.”
T=P(I+I/N)YN
Beyond Doubling
• A=P(1+r/n)nt compounding interest
– Annuities
– Mutual Funds
– Investments
– Savings
– Credit Cards
– Loans
Example
We are going to purchase a new bedroom set. At
Haverty’s Furniture a Cherry Classic bedroom
set which includes King Poster bed, dresser,
chest, and two night stands. The cost of the
set is \$7095. The interest rate is 24.9%. You
have three years to pay this loan off.
A=7095(1+.249/365)3X365

Answer: 14971.31
Problem
We are to buy a car. What would you be willing
to pay for a car? Keep in mind current car
loans are five years and compounded daily.
What are car dealers currently offering for
interest rates?

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 views: 8 posted: 9/19/2011 language: English pages: 5