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    Annual/Actual Growth Rate

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    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 June 3, 2020, 7:57 pm ad1c9bdddf
    https://brainmass.com/business/accounting/annual-actual-growth-rate-118438

    Solution Preview

    The above scenario ignores the effect of compounding. Compounding ...

    Solution Summary

    The solution explains the correct way of calculation the growth rate.

    $2.19

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