Rule Of 72 Worksheet
According to the rule of 72 how often will an individuals investment double. The rule of 72 is a shortcut to estimate the number of years required to double your money at a given annual rate of return.
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The rule of 72 is a simplified version of the more involved compound interest calculation.
Rule of 72 worksheet. Rule of 72 definition. Rule of 72 formula. The 72 t early distribution illustration helps you explore your options for taking ira distributions before you reach 59 without incurring the irs 10 early distribution penalty.
This calculator provides both the rule of 72 estimate as well as the precise answer resulting from the formal compound interest calculation. Once you find your worksheet click on pop out icon or print icon to worksheet to print or download. Remember the rule of 72 is an approximation but it s a remarkably accurate one we can use with confidence for our rule 1 calculations.
For example if you want to know how long it will take to double your money at eight percent interest divide 8 into 72 and get 9 years. Rule of 72 refers to an approximate approach of determining that how much time long term investment will take in getting double value at the fixed rate of interest and is calculated by dividing the annual rate of interest by 72. 72 6 5 11 years 2.
Internal revenue code irc section 72 t 2 a iv defines these distributions as substantially equal periodic payments. How long will it take to double doug s investment. The rule states that you divide the rate expressed as a.
Worksheet will open in a new window. It is a useful rule of thumb for estimating the doubling of an investment. In simple terms it helps us understand when we can double our investment.
Rule of 72 worksheet free printable reading with questions for grade 7 12 economics pdf file. The average stock market return since 1926 has been 11 0. Some of the worksheets displayed are rule of 72 the rule of 72 rule of 72 math work chapters 11 12 grammar and mechanics work writing rules es1 saving and investing normal distributions math 728.
The rule says that to find the number of years required to double your money at a given interest rate you just divide the interest rate into 72. 72 t early distribution analysis. Doug invested 2 500 into a certificate of deposit earning 6 5 0 interest.
For example the rule of 72 states that 1 invested at an annual fixed interest rate of 10 would take 7 2 years 72 10 7 2 to grow to 2. The exact number of years it takes to double once at a 24 growth rate is 3 2 years which is to say that the rule of 72 is very accurate around 10 but gets less accurate the farther from 10 we go. Rule of 72 key 1.
72 11 6 5 years 3. How the rule of 72 works.
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