Finding Annual Growth Rate

[Assad]

Hi

Could someone advise, on finding annual growth rate equation.

Example is:-

An X items was valued at 13500 and after 24 Years it is
valued at 180000.

The equation shall forecast, Annual Growth Rate in %.
( which means, value X grown over by Y % ( which shall be static value )
and another addition of Y for next year and so on till 24th year.

And shall not forecast % to its base value ( 13500 ), which I had figured
out to be at 51.38% for 24 years.

Hope someone really understands,

Bye.

Assad

 

[Niek Otten]

Hi Assad,

=RATE(24,,-13500,180000)

Kind regards,

Niek Otten
Microsoft MVP - Excel

| Hi
|
| Could someone advise, on finding annual growth rate equation.
|
| Example is:-
|
| An X items was valued at 13500 and after 24 Years it is
| valued at 180000.
|
| The equation shall forecast, Annual Growth Rate in %.
| ( which means, value X grown over by Y % ( which shall be static value )
| and another addition of Y for next year and so on till 24th year.
|
| And shall not forecast % to its base value ( 13500 ), which I had figured
| out to be at 51.38% for 24 years.
|
| Hope someone really understands,
|
| Bye.
|
| Assad
|
|

 

[joeu2004]

Could someone advise, on finding annual growth rate equation.
Example is:-
An X items was valued at 13500 and after 24 Years it is
valued at 180000.
The equation shall forecast, Annual Growth Rate in %.
( which means, value X grown over by Y % ( which shall be static value )

=rate(24, 0, -13500, 180000)

(11.4% per year.)

and another addition of Y for next year and so on till 24th year.

This part of your question is unclear. If you are asking for a formula that
will give you "Y", that cannot be done unless you first know the compound
growth rate. But if you are asking how to compute the compound growth rate
given some "Y" -- for example, 2000 -- then:

=rate(24, -2000, -13500, 180000)

(6.84% per year.)

 

[Assad]

Hi

Thanks " NIEK OTTEN & (e-mail address removed) "

Problem solved,

Again thanks to you both guys for helping me, I really really
appreciate yours quick answers................

Regards.

Assad

 

[Thomas Hastings]

Thanks - this was helpful to me too, five months later.

Can you explain to me, however, why the third argument in this function has
to be entered as a negative number?

There must be a finance-related reason, but I'm using this formula to
calculate an average GDP growth rate over a period of time, and it's highly
counter-intuitive (and therefore hard to teach) that one needs to make the
GDP in the base year negative.

thanks, -

Thomas Hastings
(e-mail address removed)

 

[Bernard Liengme]

Money has a sign because it can flow in one of two ways. Generally we use +
for money coming at us (a loan from the bank, interested received on a
saving account, etc) and a negative sign (-) for money leaving us (payment
made on a loan, taxes paid (you do pay taxes, I hope), deposits to a savings
account, etc)
best wishes

 

[joeu2004]

Can you explain to me, however, why the third argument
in this function has to be entered as a negative number?

Inflows and outflows must have opposite signs. But whether you use
plus for in and minus for out, or vice versa, is a matter of taste and
sometimes context.

Most people use plus for inflows and minus for outflows. Hopefully
that does not seem "highly counter-intuitive" to you. But note that
in that case, lenders and borrowers, for example, would choose
different signs.

I usually assign plus and minus so that the Excel function returns a
non-negative value. (Except when my spreadsheet design reflects
positive and negative values.) So I would write the functions the
same way whether I am a lender or borrower. But I still must be
consistent with respect to the sign of inflows and outflows.

There must be a finance-related reason

It is really more of an algebraic reason, and now a computer
programming reason. I have never heard a financial person speak of a
loan as -$100,000 ;->.

(A bookkeeper might. But again, whether it is a negative or positive
value depends on the type of the account.)

but I'm using this formula to
calculate an average GDP growth rate over a period of time, and it's highly
counter-intuitive (and therefore hard to teach) that one needs to make the
GDP in the base year negative.

Think of it this way: you are "paying" (investing) the present value
and "receiving" (growing to) the future value. Thus, PV can be
thought of as an outflow, and FV can be thought of as an inflow.

 

[Thomas Hastings]

Think of it this way: you are "paying" (investing) the present value
and "receiving" (growing to) the future value. Thus, PV can be
thought of as an outflow, and FV can be thought of as an inflow.

thanks - helpful again, especially this last bit here.