monthly growth rate

[Guest]

Hi,

Not sure how relevant this is... but I need help calculating a monthly
growth rate for the following:

Start Value in Month 1: 750,000
End Value in Month 12: 1,500,000

How do I calculate the monthly growth rate so that I start with 750,000 and
end up with 1,500,000 on the twelfth month?

Thanks in advance

 

[Guest]

Use 11.57%

In A1 enter 750000
in A2 enter:
=A1*(1+$B$1) and copy down
In B1 enter say .01 and then pull-down:
Tools > Goal seek... and request A12 be 2500000 by setting B1
Goal seek should prodect the following in column A:

750,000.00
836,749.95
933,533.97
1,041,512.67
1,161,980.90
1,296,383.28
1,446,331.52
1,613,623.77
1,800,266.15
2,008,496.81
2,240,812.80
2,500,000.00

 

[Guest]

Thanks. Greatly appreciate it!

But, is there a more methodical approach to solve it rather than the short
cut?

 

[Guest]

I need help calculating a monthly growth rate for the
following:
Start Value in Month 1: 750,000
End Value in Month 12: 1,500,000
How do I calculate the monthly growth rate so that I
start with 750,000 and end up with 1,500,000 on the
twelfth month?

Depends on what you mean by "growth rate".

The geometric growth rate is (1500000/750000)^(1/11) - 1.
If that formula is in B1 and 750000 is in A1, you compute the
next month in A2 by A1*(1+$B$1) and copy down through A12.

By the way, if the formula throws you for a loop, you can think
of this as a savings account where you start with 750000 at
the start of the 1st month and it grows to 1500000 by the
start of the 12th month. Then the monthly growth rate can
be computed by RATE(11,,-750000,1500000).

The linear growth rate (change per month) is
(1500000-750000)/11. If that formula is in B1 and 7500000
is in A1, then A2 would be A1+$B$1 and copy down through
A12.

Beware of rounding. It will cause a small error in the final
month. Well, in every month. But you might not notice
until you see that the 12th month is not 1500000.

 

[Richard Buttrey]

Hi,

Not sure how relevant this is... but I need help calculating a monthly
growth rate for the following:

Start Value in Month 1: 750,000
End Value in Month 12: 1,500,000

How do I calculate the monthly growth rate so that I start with 750,000 and
end up with 1,500,000 on the twelfth month?

Thanks in advance

I don't think there's an Excel Financial function, but the basic
formula to calculate the periodic compound interest rate is:

1 - (FV/PV) ^ (1/n)

where PV = Present Value, FV = Future Value and n = number of periods.
Slotting your numbers in we get

1 - (1500000/750000) ^ (1/12) = .059463094 %

HTH




Richard Buttrey
__

 

[Guest]

exact explanation i was looking for! thanks so much!