ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -For example, if an investment scheme promises an 8% annual compounded rate of return, it will take approximately nine years (72 / 8 = 9) to double the invested money.

Detailed explanation-2: -If you want your money to double every 8 years, you will need to earn an interest rate of 9% (72 divided by 8).

Detailed explanation-3: -Simply divide the number 72 by the annual rate of return to determine how many years it will take to double. For example, $100 with a fixed rate of return of 8% will take approximately nine (72 / 8) years to grow to $200.

Detailed explanation-4: -Similarly, if you want to double your money in five years, your investments will need to grow at around 14.4% per year (72/5). If your goal is to double your invested sum in 10 years, you should invest in a manner to earn around 7% every year. Rule of 72 provides an approximate idea and assumes one time investment.