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[Mental Math] Returns (IRR) & Rule of 72

IRR (Rule of Thumb Math – Assuming Exit in Year 5 and No Interim Dividends):

  • 1.5x money multiple: 8%
  • 2.0x money multiple: 15%
  • 2.5x money multiple: 20%
  • 3.0x money multiple: 25%
  • 3.5x money multiple: 28%
  • 4.0x money multiple: 32%

IRR Table

Years Required to Double Investment (Rule of 72):

  • Rule of 72 is a shortcut to estimate the number of years required to double your money at a given annual rate of return:

Years Required to Double Investment = 72 divided by [compound annual rate of return]

  • For example, at an annual rate of return of 8%, it would take 9 years to double your money (72/8=9 years)
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