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Average yearly inflation. If an item costs C at one time and D n years later,...

Average yearly inflation. If an item costs C at one time and D n years later, and Cxn = D, then we call x the average annual inflation factor (for example, x = 1.04 refers to an inflation rate of 4%).

At a 6% average annual inflation factor, it will take 12 years for the house to double.  If 6% is replaced by r%, bankers use 72/r to estimate the number of years. This is called the rule of 72. Graph this estimate and the actual answer over the interval 1 <= r <= 12. Comment on the accuracy of the rule of 72.

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