Section 1
1. Section 1
1.29. Explore 3
Section 1: Simple and Compound Interest
Self-Check 1
- Complete the following table for compound interest investments using the Rule of 72. The first example, 4%, is completely done for your reference.
Interest Rate Doubling Time Your Calculation 4% 18 years 72 ÷ 4 = 18 24 years 12% 0.09 0.02 8 years 72 ÷ 6 = 12
Answer
- Karl has invested $1000 in a compound-interest bond earning interest at the rate of 0.024 per annum. Karl applied the Rule of 72 as follows.
72 ÷ 0.024 = 3000
At that rate, Karl says it will take 3000 years to double his investment. Is Karl correct? Why or why not? Answer
It is now time to add new math terms to Mathematics 20-3: Glossary Terms.
In this lesson the new term you will add is
- Rule of 72
At this time, you may want to add the Rule of 72 formula to your Formula Sheet.