Hayes Textiles has shown the following percentage increase in net worth over the last 5 years (Year-Percentage): 1992-5%. 1993-10.5%, 1994-9.0% 1995-6.0% 1996-7.5% ue 1-A ue 1-B What is the average percentage increase in net worth over the 5-year period?
Answers
Given : Hayes Textiles has shown the following percentage increase in net worth over the last 5 years (Year-Percentage): 1992-5%. 1993-10.5%, 1994-9.0% 1995-6.0% 1996-7.5%
To Find : What is the average percentage increase in net worth over the 5-year period
Solution:
Let say in 1991 = 100P
1992 , 5%. = 100P + (5/100)100P = 105P
1993 , 10.5 % = 105P + (10.5/100)105P = 116.025P
1994 , 9 % =116.025P + (9/100)116.025P =126.46725P
1995 , 6 % =126.46725P + (6/100)126.46725P =134.055285P
1996 7.5% = 134.055285P + (7.5/100)134.055285P = 144.109431375P
= 144.11 P
Growth in Year = 44.11 %
Average Growth not compounded = (44.11)/5 = 8.822 %
Average growth Compounded
144.11 = 100(1 + R/100)⁵
=> R = 7.582 %
average percentage increase in net worth over the 5-year period
= 8.822 % Simple
= 7.582 % Compounded
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