AutoSave a OF AAP2... Sheets Problems_2-24.xls - Compatibility Mode Home Insert Draw Page Layout Formulas Data Review View Tell me Share Comments Arial v 10 VA 2 Wrap Text General X X G E. 2 Insert v 0 V Delete Paste B 1 I U Av Y = = = Merge & Center & Conditional Format Cell Formatting es Table Styles Sort & Futer Sensitivity # Format Find & Select Analyze Data A27 A B C D E F G H | J L L 1 Compound Interest 2 3 You want to know how long it will take you to double your money when it is invested at different interest rates. 4 The amount of time it takes to double in value depends on the interest rate. 5 To estimate the number of periods to double your investment use the "Rule of 72" 6 To calculate the "Rule of 72" divide 0.72 by the interest rate. (Don't forget to include the decimal point) 7 That tells you approximately how many periods it will take to double your money if interest is compounded 8 "Compounded" means interest is paid on both the principal and any interest earned up to that point. It is larger every time. 9 "Simple" interest is when the interest is paid only on the principal. It is a fixed amount. 10 11 Let's test this theory for different interest rates 12 Enter formulas in cells C19 C20 and C21 13 Copy the formulas into the range D19:K21 14 Rule of 72 calculation =0.72 / by the interest rate. This can be written as= 0 72/0.03, for example. 15 Rule of 72 calculation = 0;72 / by the interest rate. This can also be expressed in integers,= 72/3 for example. 16 Variable Name 17 Principal =$1 1 1 1 1 1 1 1 1 18 Interest Rate per period (IR) 0.02 0.03 0.04 0.06 0.08 0.09 19 Sum of Principal + Interest (SUM) 20 Rule of 72 = Number of Periods (NPER) 21 Amount of Savings after N periods (SUMANPER) 22 23 is the rule of 72 a reliable way to estimate doubling time? 24 What is the trend in the "Amount of Savings" as interest rates increase? (P) 1 0.12 1 0.18 0.36 25 Grass Seed TicketSales DieselorGasoline Sales Commission Compoundinterest + Ready a + 165% AutoSave a OF AAP2... Sheets Problems_2-24.xls - Compatibility Mode Home Insert Draw Page Layout Formulas Data Review View Tell me Share Comments Arial v 10 VA 2 Wrap Text General X X G E. 2 Insert v 0 V Delete Paste B 1 I U Av Y = = = Merge & Center & Conditional Format Cell Formatting es Table Styles Sort & Futer Sensitivity # Format Find & Select Analyze Data A27 A B C D E F G H | J L L 1 Compound Interest 2 3 You want to know how long it will take you to double your money when it is invested at different interest rates. 4 The amount of time it takes to double in value depends on the interest rate. 5 To estimate the number of periods to double your investment use the "Rule of 72" 6 To calculate the "Rule of 72" divide 0.72 by the interest rate. (Don't forget to include the decimal point) 7 That tells you approximately how many periods it will take to double your money if interest is compounded 8 "Compounded" means interest is paid on both the principal and any interest earned up to that point. It is larger every time. 9 "Simple" interest is when the interest is paid only on the principal. It is a fixed amount. 10 11 Let's test this theory for different interest rates 12 Enter formulas in cells C19 C20 and C21 13 Copy the formulas into the range D19:K21 14 Rule of 72 calculation =0.72 / by the interest rate. This can be written as= 0 72/0.03, for example. 15 Rule of 72 calculation = 0;72 / by the interest rate. This can also be expressed in integers,= 72/3 for example. 16 Variable Name 17 Principal =$1 1 1 1 1 1 1 1 1 18 Interest Rate per period (IR) 0.02 0.03 0.04 0.06 0.08 0.09 19 Sum of Principal + Interest (SUM) 20 Rule of 72 = Number of Periods (NPER) 21 Amount of Savings after N periods (SUMANPER) 22 23 is the rule of 72 a reliable way to estimate doubling time? 24 What is the trend in the "Amount of Savings" as interest rates increase? (P) 1 0.12 1 0.18 0.36 25 Grass Seed TicketSales DieselorGasoline Sales Commission Compoundinterest + Ready a + 165%