The formula to calculate the Average Growth Factor (GF) is:
\[ GF = \frac{FV}{IV} \]
Where:
Let's say the initial value (IV) is 100 and the final value (FV) is 150. Using the formula:
\[ GF = \frac{150}{100} = 1.5 \]
So, the growth factor (GF) is 1.5.
Definition: The growth factor is a multiplier that describes the rate of growth over a period.
Formula: \( \text{Growth Factor} = \frac{\text{Final Value}}{\text{Initial Value}} \)
Example: \( \text{Growth Factor} = \frac{150}{100} \)
Definition: The growth rate can be calculated from the growth factor.
Formula: \( \text{Growth Rate} = (\text{Growth Factor} - 1) \times 100 \)
Example: \( \text{Growth Rate} = (1.5 - 1) \times 100 \)
Definition: The average percentage growth is the average rate at which a value grows over a period.
Formula: \( \text{Average Growth Rate} = \left( \frac{\text{Final Value}}{\text{Initial Value}} \right)^{\frac{1}{n}} - 1 \)
Example: \( \text{Average Growth Rate} = \left( \frac{200}{100} \right)^{\frac{1}{5}} - 1 \)
Definition: The average annual growth rate is the average rate at which a value grows per year.
Formula: \( \text{Average Annual Growth Rate} = \left( \frac{\text{Final Value}}{\text{Initial Value}} \right)^{\frac{1}{n}} - 1 \)
Example: \( \text{Average Annual Growth Rate} = \left( \frac{300}{100} \right)^{\frac{1}{10}} - 1 \)
