Your banker tells you that your (one time) investment will double every 12 years. You figure that the effective annual interest rate is percent. The effective annual interest rate is the profit you obtain at the end of each of year, figured as a percentage. Of course you realize that each year you receive interest also for the interest earned in the preceding years.
Hint: Call the unknown interest rate $p$. Every year you multiply your capital with $(1+p/100)$.