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Math Help - Negative Average Growth Rate

  1. #1
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    Question 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?
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  2. #2
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    Re: Negative Average Growth Rate

    Quote Originally Posted by sunflower7 View Post
    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.
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    Re: Negative Average Growth Rate

    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?
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  4. #4
    MHF Contributor ebaines's Avatar
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    Re: Negative Average Growth Rate

    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
    Last edited by ebaines; October 24th 2012 at 07:45 AM.
    Thanks from sunflower7
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    Re: Negative Average Growth Rate

    Thank you!
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