Compound Interest and the Rule of 72

Compound interest is a percentage that is added to the original amount annualy. When people invest or borrow money this is what is used to calculate the amount of money you have earned or payed to the loaner. The formula looks like this.

P is the principal (the initial amount you borrow or deposit)

r is the annual rate of interest (percentage)

n is the number of years the amount is deposited or borrowed for.

A is the amount of money accumulated after n years, including interest.

When the interest is compounded once a year:

A = P(1 + r)n

Rule 72 is used to calculate how much percentage you will need in oder to double your money and how many years it will take.
for example if you have $100 and want to make it $200 in one year then your interest has to be 72%.
2years=36%.
3years=24%.
4years=18%.
And so on.