What is the definition of the Rule of 72?

Economics Dec 17, 2020

Expert Solution

The Rule of 72 is an economic explanation of the route to determine how long it will take to double an investment if there is a fixed annual rate of interest. With every increase in rates of return, the accuracy of this method decreases. An example of the rule of 72 is as follows: if the rate of return is 2%, it will take roughly 36 years to double one's investment.

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