What is the formula for period to period percentage change at annual rates?
What is the formula for period to period percentage change at annual rates?
It depends upon the period. Let’s say on Jan 1, starting with 10,000, we
desired an annual rate of 12%. One year later, (Jan 1 again) we would have
11,200. Lets also say the period is one month. In this case the formula is
(1+1/12)^(1/12)-1. This yields 0.94888%, which is just under the 1% we would
get without compounding. Testing this in Excel:
1. Put months in Column A
2. Put 10,000 in B1
3. Put =B1*(1+$C$1) in B2 and copy down
4. Put .94888 in C1
We find:
jan 10,000.00 0.94888%
feb 10,094.89
mar 10,190.68
apr 10,287.37
may 10,384.99
jun 10,483.53
july 10,583.01
aug 10,683.43
sep 10,784.80
oct 10,887.13
nov 10,990.44
dec 11,094.72
jan 11,200.00
Just what we wanted.
--
Gary''s Student
"cs120" wrote:
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> What is the formula for period to period percentage change at annual
> rates?
>
>
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