Doubling Time – Method (with Calculator)

Doubling Time Calculator (Click Here or Scroll Down)

The Doubling Time formulation is utilized in Finance to calculate the period of time required to double an investment or cash in an

hobby bearing account.

It is important to be aware that r money market within the doubling time formulation is the price according to length. If one needs

to calculate the amount of time to double their money in a money market account this is compounded month-to-month, money market then

r desires to explicit the month-to-month charge and now not the once a year price. The monthly price may be located via dividing

the once a year rate by way of 12. With this situation, the doubling time components will deliver the quantity of months that it takes to double

money and not years.

In addition to expressing r because the month-to-month fee if the account is compounded month-to-month, one could

additionally use the powerful annual charge, or annual percent yield, as r in the doubling time system.

Example of Doubling Time Formula

Jacques would really like to determine how long it would take to double the money in his cash marketplace account. He is incomes 6% per

12 months, that is compounded monthly. Looking on the doubling time method, we want to do not forget that the 6% might need to be

divided via 12 so that you can come to a monthly charge because the account is compounded month-to-month. Given this,

r inside the doubling time formulation would be .1/2 (.06/12). After putting this into the doubling time

method, we’ve got:

After fixing, the doubling time method suggests that Jacques could double his cash inside 138.ninety eight months, or eleven.58 years.

As said earlier, some other technique to the doubling time method that would be used with this case might be to calculate

the once a year percent yield, or effective annual rate, and use it as r. The annual percent yield on

6% compounded month-to-month might be 6.168%. Using 6.168% in the doubling time system might go back the equal result of 11.fifty eight years.

Alternative to Doubling Time

For quick estimations of how lengthy it takes to double the cash on an investment, a few may additionally select to apply the rule of thumb of money market 72. The

rule of 72 is observed through dividing seventy two with the aid of the charge of interest expressed as an entire quantity. For example, a rate of 6% could be

predicted with the aid of dividing seventy two by way of 6 which might result in 12 years. As stated, this is most effective an estimation as a 6% rate could take

11.ninety years the use of the real doubling time components.

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Formulas related to Doubling Time

Rule of seventy two

Doubling Time – Continuous Compounding

Doubling Time – Simple Interest

Solve for Number of Periods – PV&FV

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