It’s been stated, perhaps optimistically overstated, that no formula is more useful for understanding inflation that the Rule of 72. Go to www.moneychimp.com/features/rule72.htm. Whose Web site is it? Given an interest rate of 4%, calculate the exact answer and Rule of 72 estimate of how many years are required for an investment to double. Then, given that it would take 12 years for an investment to double, calculate the exact answer and Rule of 72 estimate of the required interest rate. Why does the Rule of 72 work?
