Rules of Rates
That's Interesting!
Excel-
lent Answer!
lent Answer!
A Frequent Question
The Future is Now
100
This is the constant used in the rule of 72 to estimate the time needed to double your money.
What is 72?
100
This is the price paid for the use of borrowed money.
What is the interest rate?
100
This is the first character you type when entering a formula or function in Excel.
What is "="?
100
This is compounding that occurs once every year.
What is annual?
100
This is money coming in or money going out at certain points in time.
What is cash flow?
200
Using the rule of 72, this is approximately how long will it take to double your money at an 8% interest rate.
What is 9 years?
200
If you invest $100 at an interest rate of 10% for 1 year, this is the amount of interest you'd earn.
What is $10
200
This Excel function calculates the future value of cash flows given PV, PMT, and r.
What is FV?
200
This is compounding that occurs 12 times each year.
What is monthly?
200
This is the current value of a future cash flow
What is present value.
300
6 years
Using the rule of 72, what is the approximate time needed to double an investment at a 12% interest rate?
300
The method of interest calculation where you earn "interest on interest."
What is compound interest?
300
This Excel function calculates the present value given the future value, interest rate, PMT, and number of periods.
What is PV?
300
This the future value formula.
What is
FV=PV*(1+r)^n
?
300
This is the future value of $100 in one year invested at 7%.
What is $107?
400
6%
Using the rule of 72, what is the interest rate that will double your money in 12 years?
400
This type of interest is calculated on the initial principal, which also includes all the accumulated interest.
What is compound interest?
400
This Excel function calculates the required interest rate given PV, FV, and NPER.
What is RATE?
400
It is an important detail missing from this chart:
What is the interest rate?
400
This is the present value of $55 in one year assuming an interest rate of 10%
What is $50?
500
This is a limitation using the rule of 72.
What is "less accuracy for high interest rates or long time periods"?
500
The type of interest that is calculated ONLY on the principal amount
What is simple interest
500
This Excel function calculates the required number of periods given PV, FV, and r.
What is NPER?
500
FV=PV(1+r/n)^(nt)
What is the formula for future value with interest compounded n times per year?
500
This is the future value of $100 invested at 10% for two years, compounded annually.
What is $121?