Acme Corporation sales were $6million in 1995 and $12 million in 2000. Since sales have grown 100% in 5 years the annual growth rate is 20% (100%/5). What's wrong with this calculation and what is Acme's actual annual growth rate?© BrainMass Inc. brainmass.com March 4, 2021, 7:43 pm ad1c9bdddf
The above scenario ignores the effect of compounding. Compounding ...
The solution explains the correct way of calculation the growth rate.