Ann K
asked on
How to calculate the growth rate
IS THIS IS CORRECT
During the past 10 years, the level of demand for a company's product has increased from 1,150 units per day to 2,150 units per day. What was the average annual compound growth rate over this period? Show the solution.
SOLUTION
2150=1150(1+g)^10
1.8695 = (1+g)^10
Growth Rate=10%
During the past 10 years, the level of demand for a company's product has increased from 1,150 units per day to 2,150 units per day. What was the average annual compound growth rate over this period? Show the solution.
SOLUTION
2150=1150(1+g)^10
1.8695 = (1+g)^10
Growth Rate=10%
Hi Ann, any thoughts on the above post?
ASKER CERTIFIED SOLUTION
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That is essentially the answer I gave earlier
SOLUTION
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ASKER
Thank You.
I gave the same answer earlier and in addition proved the answer.
2150/1150 = 1.8695 total growth.
Over 10 years: 1.8695 raised to the 0.1 power = 1.06466 or 6.5% average annual growth rate.
Test: 1.06.. x 1.06.. x ... 1.06.. 10 times = 1.8695.
A growth rate of 10% annually would compound to 2.59.