Thread: Negative Average Growth Rate

Need someone to check my math. I followed the formula for average growth rate in the post here. I have five years of data. The values for the first and last years are:

2007: 1,292
2011: 1,097

I calculate an average growth rate of -4.01%. Is that correct?

Originally Posted by sunflower7

Need someone to check my math. I followed the formula for average growth rate in the post here. I have five years of data. The values for the first and last years are:

2007: 1,292
2011: 1,097

I calculate an average growth rate of -4.01%. Is that correct?

Not quite. Remember that if you have 5 years of data, then you will be working out the change over the four years difference in time, not 5.

I thought I had accounted for the change period. Here is the formula I used in Excel:

=EXP(LN(I7/E7)/(COUNT(E7:I7)-1))-1

If I plug in the numbers, then the formula is:
=EXP(LN(1097/1292)/4)-1

which gives a rate of -4.01%. Or am I doing something wrong?

You have the correct answer. To double check you can use Excel to give the numbers for 2008, 2009, and 2010 as well, and using a calculated growrth rate of -4.008% what I find is:

2007: 1292
2008: 1240.2
2009: 1190.5
2010: 1142.8
2011: 1097

Thank you!