What is the rule of 72 in private equity?
The Rule of 72 in private equity is a simplified mental math shortcut used by investors and fund managers to quickly estimate the time or rate of return required for an investment to double in value. By dividing 72 by the expected annual compound growth rate or internal rate of return, professionals can instantly approximate how many years it will take for their invested capital to experience a 100 percent increase, helping them evaluate the pacing and potential exit horizons of portfolio companies.
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