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Annual Growth Rate set over 25%, actual rate is greater than assumption

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    Annual Growth Rate set over 25%, actual rate is greater than assumption

    I'm trying to apply an annual growth rate to my model. The way I have done it so far it works but after I set the Growth Rate assumption above 25%, when I calc. the actual rate it's above 25%.

    Attached is a WB with a better explanation. I think it's a common math issue. I need to apply to growth rate to the previous months value.

    ExcelForumPost.xlsm

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    Forum Guru Ace_XL's Avatar
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    Re: Annual Growth Rate set over 25%, actual rate is greater than assumption

    Good day,

    The inconsistent results are on account of compounding i.e. the 127% result is because of growth calculated on the growth in the previous period too. To achieve the 93% growth, please calculate growth on the Jan-12 value i.e.75 for all months.

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