Quantitative
Rule of 72
Years to double is about 72 divided by the growth rate.
Last reviewedWhat does Rule of 72 mean?
The rule of 72 is a quick estimate: something growing at r% a year doubles in about 72 ÷ r years. At 8% a year, it takes about 9 years. It is an approximation that works best for rates between about 6% and 10% and gets less accurate for very high rates.
Where does it come up in case interview prep?
Related terms
- CAGR (compound annual growth rate)The steady yearly growth rate that links a start value to an end value.
- Time value of moneyMoney today is worth more than the same money later.
- ExhibitA chart or table the interviewer hands you to reason from.
- Percent versus percentage pointsA change in a rate is measured in points; its relative change in percent.
- Weighted averageAn average where each part counts in proportion to its size.
- Lakh and croreIndian number units: 1 lakh = 100,000 and 1 crore = 10 million.
- Run rateCurrent performance scaled up to a full year.
- Market sizingEstimating how big a market or quantity is.