1

I'd like to know if there is a rule of thumb or formula that one can use to get a rough sense of the net difference between the end value, given two different compound interest rates, different principles and the period of compounding which is common to both.

In investing in the stock markets, a common use case involves dealing with two companies with different growth rates. I often have to resort to excel/calculator to determine the point in time when the EPS of one company will overtake the other. I was wondering if there is a rough rule of thumb that can help one intuitively gauge this in the mind.

J. M. ain't a mathematician
  • 75,051
Mani
  • 11

1 Answers1

1

a) Be an arithmetic god

b) Use excel like everyone else :)

Really thought the "sense" of the difference can be obtained by developing a good intuition for arithmetic operations. This usually comes when you try just calculating the difference in your head enough times. Over time you'll develop an intuition for it.

In general though, most people just let excel do the calculations

gowrath
  • 3,573
  • 13
  • 31