Graduation Gift Compound Interest Rule of 72 You want to have $28,000 to buy a used car when your child graduates from high school 12 yers from now. You have $14,000 and want to know the minimum acceptable interest rate on your savings that will allow you to reach your goal. The amount of time it takes for your savings to double in value depends on the interest rate. To estimate the number of periods to double the value of your savings, you can use the "Rule of 72" The Rule of 72 works by dividing 72 by the interest vate. Both numbers are expressed as integers. That number tells you approximately how many periods it will take to double your money if interest is compounded Let's test this theory for different interest rates. Enter formulas in cells C17, C18 and C19 Copy the formulas into the range D17:K19 1 1 1 1 1 1 1 0.02 1 0.08 1 0.18 0.03 0.04 0.06 0.09 0.12 0.36 Principal =$1 Interest Rate per period Sum of Principal + Interest Rule of 72 = Number of Periods Amount of Savings after N periods Variable Name (P) (IR) (SUM) (NPER) (SUM^NPER) If you've done it right, the values in row 19 should all be close to 2 What is the lowest interest rate that will allow you to double your money in 12 years? Is the Rule of 72 a reliable way to estimate doubling time? What is the trend in the "Amount of Savings" as interest rates increase