How to Calculate an Annual Percentage Growth Rate

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					How to Calculate an Annual Percentage Growth Rate
Annual percentage growth rates are useful when considering investment
opportunities. Municipalities, schools and other groups also use the
annual growth rate of populations to predict needs for buildings,
services, etc. As important and useful as these statistics are, it is not
difficult to calculate annual percentage growth rates. When considering
growth over several years, using a calculation similar to compounded
interest rates accounts for instability over time, as there may be
periods of varying growth or even of decreases.

<Steps

Single-Year Growth Rate Percentage
1Determine the value of the investment or the population at the beginning
of the year in question and at the end of the year. Imagine that City A
had a population of 150,000 at the beginning of the time period and
275,000 at the end.<
2Subtract the beginning value from the ending count. For the example,
your calculation would be 275,000 - 150,000 = 125,000.
3Divide the difference by the original value. In this case,
125,000/150,000 = .8333.
4Multiply the decimal by 100 to change it to a percentage: .8333 x 100 =
83.33. City A experienced a population growth of 83.33 percent in this
year.

Multiple-Year Growth Rate Percentage
1Subtract the beginning value from the ending value to determine total
growth. City B started with a population of 10,000. After 5 years, the
population has grown to 65,000. The increase is expressed as 65,000 -
10,000 = 55,000.
2Divide the difference by the original value or, for the example,
55,000/10,000 = 5.5.
3Divide this number by the number of years involved. For the City B case,
5.5/5 = 1.1.
4Multiply by 100 to convert the decimal to a percent: 1.1 x 100 = 110.
City B has an average annual growth percentage rate of 110 percent.<


Related wikiHows
How to Calculate Consumer Surplus
How to Calculate Annual Percentage Rate

<Sources and Citations
http://econweb.rutgers.edu/rockoff/growthrate.htm
http://www.freeby50.com/2008/05/how-to-calculate-annual-
percentage_04.html
http://pages.uoregon.edu/rgp/PPPM613/class8a.htm
http://www.fool.com/school/calculatinggrowth.htm

				
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