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 Calculate 'Compound Annual Growth Rate'?
Member
 posted August 31, 2006 04:09 PM
Does any one knows how to calculate 'Compound Annual Growth Rate? In Excel it is this

formula =POWER((E2/B2),(1/(E1-B1)))-1

Thanks.

Margaret

 Posts: 12 | Registered: March 30, 2006 IP
Virtuoso
 posted August 31, 2006 07:01 PM Hide Post
should be:
` COMPUTE VALUE/D12.2 = ((E2/B2) ** (1/(E1-B1))) -1;  `
I think.

"There is no limit to what you can achieve ... if you don’t care who gets the credit." Roger Abbott

 Posts: 1102 | Location: Toronto, Ontario | Registered: May 26, 2004 IP
Expert
 posted August 31, 2006 07:15 PM Hide Post
margo, it may help to think about it this way:
if you have values starting in 2000 and ending in 2005, then you have 6 data points, and 5 time periods.
so the cgr is the 5th root of the simple growth rate between the 2006 ending value and the 2000 starting value, that rate which if applied to the 2000 value for each of 5 years, would give you the exact same 2006 value as you actually have.
In focus , a root, of a number X is X**(1/root)
So a square root would be X**(1/2)
Yes there's a SQRT function, but to continue to other roots, its useful to know that exponentiating by the desired root's inverse is the way to go, as dhagen says

 In Focus since 1979///7706m/5 ;wintel 2008/64;OAM security; Oracle db, ///MRE/BID

 Posts: 3811 | Location: Manhattan | Registered: October 28, 2003 IP
Member
 posted September 06, 2006 07:03 AM Hide Post
Thank you for an explanation and such a quick response. Code works like a charm.

Margaret

 Posts: 12 | Registered: March 30, 2006 IP