Rule of 72
A simplified mental mathematical shortcut used to estimate the number of years required to double invested capital at a fixed annual rate of return.
Systems Engineering Analogy
A mental-math approximation of the exact logarithm formula.
Mathematical SpecificationDeterministic
Years to Double ≈ 72 / rVariables:
r:Annual rate of return expressed as a percentage (e.g. 8 for 8%)
Years (t):Estimated duration in years required to double principal capital
Worked Example Scenario
At 8%, 72 / 8 = 9 years; exact: ln(2)/ln(1.08) ≈ 9.01 years. Reasonably accurate for typical rates of about 6-10%.
Featured in: Book 01: The Money Loop
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