Calculate and Understand Your Financial Growth Rate Instantly.
Growth rate measures the increase in a specific value over a period of time, often used in financial contexts to assess investments, revenue, or profits. A higher growth rate indicates faster improvement, which is essential for financial planning and analysis.
To calculate the growth rate, divide the difference between the final and initial values by the initial value. Then, raise the result to the power of 1 divided by the number of years and subtract one, multiplying by 100 to convert to a percentage.
The formula for calculating growth rate is:
Growth Rate (%) = ((Final Value / Initial Value) ^ (1 / Years) - 1) * 100
Example: If an initial investment of $1,000 grows to $2,000 over 5 years, the growth rate would be calculated as:
Growth Rate (%) = ((2000 / 1000) ^ (1 / 5) - 1) * 100 = 14.87%
This means the investment grew at an average rate of 14.87% per year over the 5 years.