Indexation question: How calculate the index growth if we have year 1 and year 4 figures?
Costs in Year 1 = $100
Costs in Year 4 = $130
What is the yearly growth rate.
So that if I was to multiply Year by "X", and then that result by "X", until year 4 it would give me an answer of $30 dollars.
Ingeborg Hawighorst (Microsoft MVP / EE MVE)Microsoft MVP ExcelCommented:
Hello,
you cannot determine a reliable figure for growth rate from just two data points. You can calculate the average growth rate for each year between year 1 and year 4, something like
=(B4-B1)/COUNTA(A1:A4)
but that is based on a very slim date source.
Can you step back a bit and explain what you want to achieve?
year 1 : [start]
year 2 : [start] * (1+[growth])
year 3 : [start] * (1+[growth])^2
year 4 : [start] * (1+[growth])^3 = [end]
you can use the solver to solve this.
cell A1 : start value
cell A2 : growth value
cell B1 : formula =A1 (this is the value for year 1)
cell B2 : formula =A1*(1+A2) (this is the value for year 2)
cell B3 : formula =A1*(1+A2)^2 (this is the value for year 3)
cell B4 : formula =A1*(1+A2)^3 (this is the value for year 4)
Ingeborg Hawighorst (Microsoft MVP / EE MVE)Microsoft MVP ExcelCommented:
Given easycapital's question history, I very much doubt that this is homework.
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easycapitalAuthor Commented:
Very interesting approaches.
Thank you teylyn for the support.
Storm Seed, you came really close to getting all the points :)
On a serious note, this was to calculate manufacturing indexation.
Thank you.
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you cannot determine a reliable figure for growth rate from just two data points. You can calculate the average growth rate for each year between year 1 and year 4, something like
=(B4-B1)/COUNTA(A1:A4)
but that is based on a very slim date source.
Can you step back a bit and explain what you want to achieve?