Million Dollar Maths

you really want to get geeky about it you can use the more precise 69.3 as the numerator and use what is known as the Eckhart–McHale second order rule, which is this equation:

This leads to errors such as the sunk costs fallacy (in which people find it hard to give up on a lossmaking project because of the money that has already been spent on it).

So value is relative, subjective and fluctuating.

worth’. This is defined as the amount of money you would end up with if you sold all your assets and paid off all your debts at current values.

All monetary values are relative and all of them fluctuate over time

live in a material world, in which money can help to create opportunities in life. We all know that money can’t buy you love or happiness. But the lack of money can certainly lead to deprivation and frustration

Chapter 1 Summary
1. Money can be treated as a variable in a comparative value equation.
2. Use the Rule of 72 for a rough estimate of how rapidly your money will grow.
3. Exponential growth should be part of your ideal business model.
4. Unless you can find some magic beans, you will need to learn how to manage risk and uncertainty, and how to make reasonable predictions of future value.

If you really want to get geeky about it you can use the more precise 69.3 as the numerator and use what is known as the Eckhart–McHale second order rule, which is this equation:

where t is the number of periods taken to double your money and r is the rate of growth. The second part of this equation helps to improve the accuracy of the estimate for high rates of growth, for which it is otherwise increasingly inaccurate

If you really want to get geeky about it you can use the more precise 69.3 as the numerator and use what is known as the Eckhart–McHale second order rule, which is this equation:

The rule is to divide 72 by the rate of growth (or the interest rate, for savings and investments): the result gives you the number of periods it will take for the initial investment to be doubled. For instance, for an interest rate of 9% a year, we divide 72 by 9 and get 8 years. The actual time it would take money to double at 9% is 8.043 years (see Figure 5), so this is reasonably accurate