Go Premium for a chance to win a PS4. Enter to Win

x
Solved

# Growth function in Excel

Posted on 2010-08-13
Medium Priority
453 Views
I'm working on a revenue forecast and have several revenue streams.  I'm predicting a different month for stabilization, after which I think a monthly or annual growth rate is appropriate.  Until that point in time, though, I expect an exponential growth.  For example, memberships are expected to reach 10k per month by month 6, with a 5% growth per month thereafter.  I'd like to figure out, via a formula, a quick way to grow the revenue from \$0 to \$10k per month by month 6, with the ability to change the stabilization month (6 in this case) and Dollar figure (\$10k in this case) at the stabilization point.  Anyone have any ideas?
0
Question by:BBlu
• 7
• 7

LVL 93

Expert Comment

ID: 33433401
>>I'd like to figure out, via a formula, a quick way to grow the revenue from \$0 to \$10k per month by month 6Arithmetically, you can't.  There is no possible growth rate that gets from 0 to any other number, because you cannot divide by zero :)
0

LVL 93

Expert Comment

ID: 33433438
What you can do is assume your starting point is 0.01.  Now the growth rate to get you from 0.01 to GoalAmount by the end of N periods is:=(GoalAmount/0.01)^(1/(N-1))-1
0

LVL 93

Expert Comment

ID: 33433599
BTW, the rate that that formula above calculates is a per period rate; if the periods you are using here are months (i.e., going from 0.01 to 10,000 by the end of Month 6), then that rate is a monthly growth rate.
0

Author Comment

ID: 33433609
and how do I apply that to each month... for example we expect memberships to grow to a steady state of 28,633 by month 6.  What might the function be for each month (1-5; 6 = 28,633)?
0

LVL 93

Expert Comment

ID: 33433738
How would that be calculated?  Linear, or geometric (which is what my formula will do)?
0

Author Comment

ID: 33434283
I assume N is the total number of periods.  Should there be a n for the current period.  Using your formula, what would the first and second months formulas be, for example?
0

LVL 93

Expert Comment

ID: 33434368
See the attached example, which shows how to do assuming either geometric growth or linear growth.

Q-26401805.xls
0

Author Comment

ID: 33434376
Perfect!! Are you a mathematician or something? :)
0

LVL 93

Expert Comment

ID: 33434396
Nope, just a finance major in a different life :)
0

Author Comment

ID: 33434406
one question: shouldn't the .01 be in period 0?  how would the formula change if that was the case>
0

Author Comment

ID: 33434409
LOL.  Wow, I have an MBA and couldn't get that one... boy, do I feel like I wasted my money.  LOL
0

LVL 93

Accepted Solution

Patrick Matthews earned 900 total points
ID: 33434439
>>one question: shouldn't the .01 be in period 0? how would the formula change if that was the case>

Have a look here:
Q-26401805.xls
0

Author Comment

ID: 33434703
Got it.  Thank you.
0

Author Closing Comment

ID: 33434706
Thank you very much.
0

## Featured Post

Question has a verified solution.

If you are experiencing a similar issue, please ask a related question

Ever visit a website where you spotted a really cool looking Font, yet couldn't figure out which font family it belonged to, or how to get a copy of it for your own use? This article explains the process of doing exactly that, as well as showing howâ€¦
Windows Explorer lets you open cabinet (cab) files like any other folder. In VBA you can easily handle normal files and folders, but opening and indeed creating cabinet files takes a lot more - and that's you'll find here.
This Micro Tutorial will demonstrate how to use longer labels with horizontal bar charts instead of the vertical column chart.
This Micro Tutorial will demonstrate in Microsoft Excel how to add style and sexy appeal to horizontal bar charts.
###### Suggested Courses
Course of the Month12 days, 16 hours left to enroll