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Average Percentage Increase Formula:
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The Average Percentage Increase calculates the geometric mean of multiple growth rates, providing a more accurate measure of compound growth over time compared to simple arithmetic average.
The calculator uses the geometric mean formula:
Where:
Explanation: This formula accounts for the compounding effect of growth rates over multiple periods, providing the true average annual growth rate.
Details: This calculation is essential for investment analysis, business growth measurement, economic forecasting, and any scenario involving compound growth over multiple periods.
Tips: Enter growth rates as decimals separated by commas (e.g., 0.05 for 5%, 0.12 for 12%). Ensure all rates are valid numbers greater than or equal to -1 (representing -100% decrease).
Q1: Why use geometric mean instead of arithmetic mean for growth rates?
A: Geometric mean accounts for compounding effects, while arithmetic mean can overestimate true average growth, especially with volatile rates.
Q2: What's the difference between CAGR and average percentage increase?
A: They are essentially the same concept - both represent the geometric mean growth rate that would produce the same final value if applied consistently.
Q3: Can I use percentage values instead of decimals?
A: The calculator expects decimal format. Convert percentages to decimals by dividing by 100 (e.g., 5% = 0.05).
Q4: What if I have negative growth rates?
A: Negative rates are acceptable as long as they are ≥ -1 (representing complete loss). The calculator handles negative growth properly.
Q5: When is this calculation most useful?
A: Most valuable for investment returns, revenue growth analysis, population growth studies, and any multi-period growth measurement where compounding matters.