- Categories
- Finance and Business
- Investments and Trading
Download Article
Explore this Article
methods
1Calculating Growth Over One Year
2Calculating Annual Growth over Multiple Years
Other Sections
Video
Related Articles
Expert Interview
References
Article Summary
Co-authored byParidhi Jain
Last Updated: July 4, 2024Approved
Download Article
Annual percentage growth rates are useful when considering investment opportunities[1]. 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.
How to Calculate Annual Increase
To calculate an annual percentage growth rate over one year, subtract the starting value from the final value, then divide by the starting value. Multiply this result by 100 to get your growth rate displayed as a percentage.
Method 1
Method 1 of 2:
Calculating Growth Over One Year
Download Article
1
Get the starting value. To calculate the growth rate, you're going to need the starting value. The starting value is the population, revenue, or whatever metric you're considering at the beginning of the year.
- For example, if a village started the year with a population of 150, then the starting value is 150.
2
Get the final value. To calculate the growth, you'll not only need the starting value, you'll also need the final value.[2] That value is the population, revenue, or whatever metric you're considering at the end of the year.
- For example, if a village ended the year with a population of 275, then the final value is 275.
Advertisem*nt
3
Calculate the growth rate over one year. The growth is calculated with the following formula: Growth Percentage Over One Year = [3]
- Example Problem. A village grows from 150 people at the start of the year to 275 people at the end of the year. Calculate its growth percentage this year as follows:
- Growth Percentage
- ≈
- =
Advertisem*nt
Method 2
Method 2 of 2:
Calculating Annual Growth over Multiple Years
Download Article
1
Get the starting value. To calculate the growth rate, you're going to need the starting value. The starting value is the population, revenue, or whatever metric you're considering at the beginning of the period.
- For example, if the revenue of a company is $10,000 at the beginning of the period, then the starting value is 10,000.
2
Get the final value. To calculate the annual growth, you'll not only need the starting value, you'll also need the final value. That value is the population, revenue, or whatever metric you're considering at the end of the period.
- For example, if the revenue of a company is $65,000 at the period, then the final value is 65,000.
3
Determine the number of years. Since you're measuring the growth rate for a series of years, you'll need to know the number of years during the period.[4]
- For example, if you want to measure the annual revenue growth of a company between 2011 and 2015, then the number of years is 2015 - 2011 or 4.
4
Calculate the annual growth rate. The formula for calculating the annual growth rate is Growth Percentage Over One Year where f is the final value, s is the starting value, and y is the number of years.[5]
- Example Problem: A company earned $10,000 in 2011. That same company earned $65,000 four years later in 2015. What's the annual growth rate?
- Enter the values above into the growth rate formula to find the answer:
- Annual Growth Rate
- ≈
- = 59.67% annual growth
- Note — raising a value a to the exponent is equivalent to taking the bth root of a. You will likely need a calculator with an "" button, or a good online calculator.
Advertisem*nt
Expert Q&A
Search
Question
Can you give an example of computing a daily simple interest rate?
Paridhi Jain
Certified Public AccountantParidhi Jain is a Certified Public Accountant and the Co-Founder of Seva Ltd, a CPA firm operating in Maryland and Alabama. She has over 10 years of professional experience in the financial sector and has built a reputation for assisting small business owners navigate the intricacies of regulatory compliance, encompassing areas from company structuring and entity formation to detailed nexus determinations for income and sales tax. She is an active member of the Alabama Society of CPAs and has a certification in pre-professional accounting. She graduated Magna Cum Laude from the University of Maryland, Baltimore County with a major in Information Systems.
Paridhi Jain
Certified Public Accountant
Expert Answer
A good example is if you have $100 and you've mentioned a daily interest rate. Assuming an annual interest rate of 10% on a loan of $100, it means you agree to pay back $110 at the end of the year. Now, if we're dealing with daily compounding, the daily interest would be calculated as 10% divided by 365 days in a year. This equates to approximately 0.027%, or around 2.7 cents per day. Over the course of a year, this adds up to $10 in interest. So, on a daily basis, you're looking at about 0.027% interest.
Thanks! We're glad this was helpful.
Thank you for your feedback.
If wikiHow has helped you, please consider a small contribution to support us in helping more readers like you. We’re committed to providing the world with free how-to resources, and even $1 helps us in our mission.Support wikiHowYesNo
Not Helpful 0Helpful 2
Ask a Question
200 characters left
Include your email address to get a message when this question is answered.
Advertisem*nt
Video
Tips
Submit a Tip
All tip submissions are carefully reviewed before being published
Name
Please provide your name and last initial
Submit
Thanks for submitting a tip for review!
You Might Also Like
Advertisem*nt
Expert Interview
Thanks for reading our article! If you’d like to learn more about APR, check out our in-depth interview with Paridhi Jain.
References
- ↑ https://www.investopedia.com/terms/a/aagr.asp
- ↑ http://econweb.rutgers.edu/rockoff/growthrate.htm
- ↑ http://pages.uoregon.edu/rgp/PPPM613/class8a.htm
- ↑ https://pages.uoregon.edu/rgp/PPPM613/class8a.htm
- ↑ http://www.investopedia.com/ask/answers/071014/what-formula-calculating-compound-annual-growth-rate-cagr-excel.asp
About This Article
Co-authored by:
Paridhi Jain
Certified Public Accountant
This article was co-authored by Paridhi Jain. Paridhi Jain is a Certified Public Accountant and the Co-Founder of Seva Ltd, a CPA firm operating in Maryland and Alabama. She has over 10 years of professional experience in the financial sector and has built a reputation for assisting small business owners navigate the intricacies of regulatory compliance, encompassing areas from company structuring and entity formation to detailed nexus determinations for income and sales tax. She is an active member of the Alabama Society of CPAs and has a certification in pre-professional accounting. She graduated Magna Cum Laude from the University of Maryland, Baltimore County with a major in Information Systems. This article has been viewed 1,192,210 times.
5 votes - 84%
Co-authors: 16
Updated: July 4, 2024
Views:1,192,210
Categories: Investments and Trading | Finance and Business
Article SummaryX
To calculate an annual percentage growth rate over one year, subtract the starting value from the final value, then divide by the starting value. Multiply this result by 100 to get your growth rate displayed as a percentage. Keep reading to learn how to calculate annual growth over multiple years!
Did this summary help you?
In other languages
Spanish
Portuguese
Russian
German
French
Indonesian
Arabic
Dutch
Chinese
Thai
Hindi
Turkish
Korean
- Send fan mail to authors
Thanks to all authors for creating a page that has been read 1,192,210 times.
Reader Success Stories
Edward LaVigne
Oct 27, 2016
"Clear explanation. I had forgotten how to calculate average percentage increase and this made short work of my..." more
More reader storiesHide reader stories
Did this article help you?
Advertisem*nt