If you are talking about loans and interest and periodic payments, or depreciation, that is the "Rule of 78", not "Rule of 72". The number 78 represents the sum of the month ordinals 1 + 2 + ... + 12 = 78, and the proportion of interest or depreciation ("sum of years digits" method") is the month number divided by 78. The approximation is surprisingly accurate. See: http://www.tiac.net/~mabaker/rule_of_78.html At 03:47 AM 7/17/2009, Alan B. Pearce wrote: > >I had to look it up at wikipedia, but apparently, 72 comes from > >the fact that it is easier to divide integers into 72 than 70 or > >69, which aids mental calculations. This is because of the factors > >of each number: 72=2*2*2*3*3, 70=2*5*7, 69=3*23. > >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, >probably typical for a loan for purchasing a home appliance. I believe there >were ready reckoner books with tables for determining the amount still owed >if people wanted to repay the loan early, that were calculated using this >formula, which was how it came into such wide use. > >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. > >-- >http://www.piclist.com PIC/SX FAQ & list archive >View/change your membership options at >http://mailman.mit.edu/mailman/listinfo/piclist ================================================================ Robert A. LaBudde, PhD, PAS, Dpl. ACAFS e-mail: ral@lcfltd.com Least Cost Formulations, Ltd. URL: http://lcfltd.com/ 824 Timberlake Drive Tel: 757-467-0954 Virginia Beach, VA 23464-3239 Fax: 757-467-2947 "Vere scire est per causas scire" ================================================================ -- http://www.piclist.com PIC/SX FAQ & list archive View/change your membership options at http://mailman.mit.edu/mailman/listinfo/piclist