> I understood that the 72 came from the number of repayments that were
made,
and if these were made monthly, then 72 months was the period of the loan,
...
In actual practice the number 72 gets modified for the actual number of
repayments (e.g. monthly repayments on a mortgage), but the formula is still
known as 'rule of 72' because of its origins.
/>

No.
It's called "The rule of 72" because the number 72 is ALWAYS used for the
method it describes. (That, said, something near 72 may work better for
various reasons depending on the data used). (69.3147 may work better in
many cases, but it's rather harder to deal with in one' head).

In it's basic form the rule says:
"The number of years required to double a sum of money using compound
interest at an interest rate of x% pa is given by

              Years = 72/x   "

eg at 8% it takes 72/8 = 9 years to double your money.
At 5% it takes 72/5 = 14.4 ~= 15 years.


This has nothing to do with repayment rate calculations.

As noted already, the 'constant' of 72 is a product of the underlying
formula.

Having e built into, apparently, the fabric of our universe relates.
If e had a different value (read that in the same way tyou'd read "if Pi had
a different value" :-) ) then the constant would be different.

In his novel Sagan had messages from the creators of the universe embedded
in one or more of the fundamental constants. I'm looking forwards to the day
when they discover the point beyong which all subsequent digits of Pi are
zero :-).


              Russell
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