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Growth Rate
Hello: Apologizes for this is probably more of a math question, but
since this is such a great group wanted to try. Here is my issue. I'm performing a growth rate calculation and then applying that growth to project a full-year estimate. Everything looks good. However, if I try to add up the parts, I get a different answer than if I do the calculation against the whole. Any thoughts? Example Data Below: Neighborhood A Year 1 105YTD 245Full-Year Year 2 120 ? YTD Growth = (120/105)-1 = 14% Applying the 14% to 245 I get 280 for a full-year estimate. Neighborhood B Year 1 73YTD 197Full-Year Year 2 112 ? YTD Growth (112/73)-1=53% Applying the 53% I get a full-year estimate of 302 TOTAL Year 1 178YTD 442 Year 2 232 ? YTD Growth (232/178)-1=30% Applying the 30% to 442 I get 575. My issue is 280 + 302 does not equal 575. Any thoughts? |
#2
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Growth Rate
It's all math! The A data increased at 14%, the B at 53%
Since they involve different starting amounts, you cannot use the sum of the two to compute the total rate of combined amounts. -- Bernard V Liengme www.stfx.ca/people/bliengme remove caps from email "Native" wrote in message ups.com... Hello: Apologizes for this is probably more of a math question, but since this is such a great group wanted to try. Here is my issue. I'm performing a growth rate calculation and then applying that growth to project a full-year estimate. Everything looks good. However, if I try to add up the parts, I get a different answer than if I do the calculation against the whole. Any thoughts? Example Data Below: Neighborhood A Year 1 105YTD 245Full-Year Year 2 120 ? YTD Growth = (120/105)-1 = 14% Applying the 14% to 245 I get 280 for a full-year estimate. Neighborhood B Year 1 73YTD 197Full-Year Year 2 112 ? YTD Growth (112/73)-1=53% Applying the 53% I get a full-year estimate of 302 TOTAL Year 1 178YTD 442 Year 2 232 ? YTD Growth (232/178)-1=30% Applying the 30% to 442 I get 575. My issue is 280 + 302 does not equal 575. Any thoughts? |
#3
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Growth Rate
Native wrote:
Neighborhood A Year 1 105YTD 245Full-Year Year 2 120 ? YTD Growth = (120/105)-1 = 14% Applying the 14% to 245 I get 280 for a full-year estimate. Neighborhood B Year 1 73YTD 197Full-Year Year 2 112 ? YTD Growth (112/73)-1=53% Applying the 53% I get a full-year estimate of 302 TOTAL Year 1 178YTD 442 Year 2 232 ? YTD Growth (232/178)-1=30% Applying the 30% to 442 I get 575. My issue is 280 + 302 does not equal 575. Any thoughts? You want to solve for z in the following formula: A*x + B*y = (A+B)*z z =(A*x + B*y) / (A + B) where A=245, B=197, x=120/105 and y=112/73. In other words, z, the growth rate for the whole, is the weighted average of the growth rates of the parts. By the way, in this case, you need to compute z to at least one decimal place (i.e. 31.7%) in order to get the correct integer answer, namely 582. As to why your approach does not work, you are assuming: A*x1/x0 + B*y1/y0 = (A+B)*(x1+y1)/(x0+y0) = A*(x1+y1)/(x0+y0) + B*(x1+y1)/(x0+y0) where x1=120, x0=105, y1=112, y0=73. In that form, hopefully it is obvious that that would be true only if the two growth rates, x1/x0 and y1/y0, are the same. |
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