The time required for a given Principal to double (assuming
Conversion Period) for Compound
Interest is given by solving
![\begin{displaymath}
2P=P(1+r)^t,
\end{displaymath}](r_2104.gif) |
(1) |
or
![\begin{displaymath}
t={\ln 2\over\ln(1+r)},
\end{displaymath}](r_2105.gif) |
(2) |
where Ln is the Natural Logarithm. This function can be approximated by the so-called ``rule of 72'':
![\begin{displaymath}
t\approx {0.72\over r}.
\end{displaymath}](r_2106.gif) |
(3) |
The above plots show the actual doubling time
(left plot) and difference between actual and time calculated using the rule of
72 (right plot) as a function of the interest rate
.
See also Compound Interest, Interest
References
Avanzini, J. F. Rapid Debt-Reduction Strategies. Fort Worth, TX: HIS Pub., 1990.
© 1996-9 Eric W. Weisstein
1999-05-25