What is the formula for period to period percentage change at annual
rates?


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cs120
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It depends upon the period. Lets say on Jan 1, starting with 10,000, we
desired an annual rate of 12%. One year later, (Jan 1 again) we would have
11,200. Lets also say the period is one month. In this case the formula is
(1+1/12)^(1/12)-1. This yields 0.94888%, which is just under the 1% we would
get without compounding. Testing this in Excel:
1. Put months in Column A
2. Put 10,000 in B1
3. Put =B1*(1+$C$1) in B2 and copy down
4. Put .94888 in C1
We find:

jan 10,000.00 0.94888%
feb 10,094.89
mar 10,190.68
apr 10,287.37
may 10,384.99
jun 10,483.53
july 10,583.01
aug 10,683.43
sep 10,784.80
oct 10,887.13
nov 10,990.44
dec 11,094.72
jan 11,200.00

Just what we wanted.
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Gary''s Student


"cs120" wrote:


What is the formula for period to period percentage change at annual
rates?


--
cs120
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