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What Every Real Estate Investor Needs to Know About Cash Flow... And 36 Other Key Financial Measures, Updated Edition, 2nd Edition by Frank Gallinelli

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CHAPTER 9Calculation 3: Rule of 72s

What It Means

Here is a great little parlor trick to calculate the approximate number of years for an investment to double in value at a particular rate of compound interest.

Simply take the rate of growth and divide it as a whole number into 72.  Keep in mind that the answer is not precise; you would need to divide into 72.73 to nail the exact amount.

How to Calculate

Number of Years to Double in Value (approximate) = 72 / Rate of Growth

Example

You purchase a piece of property for $100,000 in an area where property values have grown at 8% annually. If they continue to grow at that rate, about how long will it take for the property to double in value?

Number of Years to Double in Value (approximate) = 72 / ...

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