Welcome to Experts Exchange

Add your voice to the tech community where 5M+ people, just like you, are talking about what matters.

  • Help others & share knowledge
  • Earn cash & points
  • Learn & ask questions
Solved

"Rule of 78s" calculation

Posted on 2013-01-27
3
348 Views
Last Modified: 2013-01-31
Does anyone have an example of C# code that does an accurate "Rule of 78s" calculation? I've spent a few hours trying to get this figured out so I can build an amotization table...

I have the table logic built and working. I have spreadsheet values I'm trying to replicate; but I don't understand (and haven't been able to replicate) the fomulas.

Any help here would be greatly appreciated!

Thanks
Payment-Calculator.XLS
0
Comment
Question by:Miles Thornton
  • 2
3 Comments
 
LVL 37

Expert Comment

by:TommySzalapski
ID: 38825182
The "rule of 72" says that if you divide the 72 by the percentage rate, it gives the approximate number of years for the investment to double.

Here is a table showing those values

%      72/%      actual value
1      72      2.047099312
2      36      2.039887344
3      24      2.032794106
4      18      2.025816515
5      14.4      2.018951594
6      12      2.012196472
7      10.3      2.005548375
8      9      1.999004627
9      8      1.992562642
10      7.2      1.98621992
20      3.6      1.927757874
30      2.4      1.876999019
50      1.44      1.792963353

So it's actually pretty close.
The formula for the last column (actual value after 72/P years) is V = (1+P/100)^(72/P)
where P is the percent.
0
 
LVL 37

Accepted Solution

by:
TommySzalapski earned 500 total points
ID: 38825189
And here's the actual number of years it would take to double compared to the guess
%      72/%      years
1      72      69.66071689
2      36      35.00278878
3      24      23.44977225
4      18      17.67298769
5      14.4      14.20669908
6      12      11.89566105
7      10.3      10.24476835
8      9      9.006468342
9      8      8.043231727
10      7.2      7.272540897
20      3.6      3.801784017
30      2.4      2.641926796
50      1.44      1.709511291

And here's the formula for the actual number of years to double
=log(2)/log(P/100+1)

Note, that if you replace the 2 with 3, it gives the number of years for the investment to triple. Also note that you can use ln or any other base for log since log(x)/log(y) is the same in any base.
0
 
LVL 1

Author Closing Comment

by:Miles Thornton
ID: 38840842
Thank you Tommy Szalapski!
0

Featured Post

Free Tool: Port Scanner

Check which ports are open to the outside world. Helps make sure that your firewall rules are working as intended.

One of a set of tools we are providing to everyone as a way of saying thank you for being a part of the community.

Question has a verified solution.

If you are experiencing a similar issue, please ask a related question

Suggested Solutions

Article by: Nadia
Linear search (searching each index in an array one by one) works almost everywhere but it is not optimal in many cases. Let's assume, we have a book which has 42949672960 pages. We also have a table of contents. Now we want to read the content on p…
This article seeks to propel the full implementation of geothermal power plants in Mexico as a renewable energy source.
This is a video describing the growing solar energy use in Utah. This is a topic that greatly interests me and so I decided to produce a video about it.
I've attached the XLSM Excel spreadsheet I used in the video and also text files containing the macros used below. https://filedb.experts-exchange.com/incoming/2017/03_w12/1151775/Permutations.txt https://filedb.experts-exchange.com/incoming/201…

808 members asked questions and received personalized solutions in the past 7 days.

Join the community of 500,000 technology professionals and ask your questions.

Join & Ask a Question