Calculating Time Value of Money

Have you ever wanted to know how long it will take to pay off a debt at various interest rates? Or,how long will it take to double your retirement funds? There are three formulas to calculate this type of result.

Rule of 72

This is the number divided by the interest rate or the number of years of the loan. The first result being the number of year to pay off the loan The second is the number of years of the debt divided into 72, determining the interest rate.

Rule of 114 (114.4 Exact)

This is the number to calculate how long it will take to triple you money.

Rule of 144

The calculation for quadrupling your balance is dividing the rate into 144 or dividing by the time element to determined the rate of return needed.

These number are not exact but while helpful to determined some number for your long term planning.

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