Annual Rate where Rate known for x Years

  • Thread starter Thread starter maxhugen
  • Start date Start date
M

maxhugen

I'm not sure which function I should be using in this scenario:

I know a value x years ago, and the value now, therefore I can work out
the percentage increase over the x years.

How can I work out what the avg annual percentage is?


MTIA
Max Hugen
Sydney Australia
 
Hi Max!

Use:

=(FV/PV)^(1/NPER)-1

Where, obtusely, FV is value now, PV is value at start, NPER is number
of years.

--
Regards
Norman Harker MVP (Excel)
Sydney, Australia
(e-mail address removed)
Excel and Word Function Lists (Classifications, Syntax and Arguments)
available free to good homes.
 
Hi Max!

You can also use the RATE function to achieve the calculation without
formulas (and for much more complex problems). The important thing to
remember with that function is that the initial investment has a
negative sign (money goes away from investor) and the value at the end
has a positive sign. If there were single level dividends these could
go (as positives) in the PMT argument. The result return is the
effective rate per period "counted" by the NPER argument.

Example:

1000 has increased to 1400 over 5 years. What is the Compound Annual
Growth Rate?

=RATE(5,0,-1000,1400,0,0)
Returns: 6.9610375720799%

--
Regards
Norman Harker MVP (Excel)
Sydney, Australia
(e-mail address removed)
Excel and Word Function Lists (Classifications, Syntax and Arguments)
available free to good homes.
 
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