Compound Interest and the Rule of 72

Posted: February 28, 2016 in Calculus: An Introduction
Tags: ,

For the past several weeks, I’ve been subjected to an advertisement on television (the rule of 72). It then occurred to me that this might be a mystery to many (my students included) who have been witness to the same. This entry is my response to any curiosities that might exist with respect to the “Rule of 72”.

My initial plan was to pick things up where the formula for compound interest left off. I then reconsidered and decided to include a quick derivation of that formula as well.

 

Compound Interest

Rule of 72

Having the formula for compound interest in place allows us to move forward and uncover the “mystery behind the Rule of 72.

 

Rule of 72

Rule of 72b

Click on the link provided here to learn about the Euler constant “e”.

 

Thanks for reading.

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