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Is there a trick to quickly estimate the average annual growth percentage / to or total compounded growth, without a calculator? i.e. X will grow with 5% for the coming 10 years.

Anonymous A
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Vlad replied on 04/02/2018
McKinsey / Accenture / Got all BIG3 offers / More than 300 real MBB cases / Harvard Business School

Hi,

You can use the rule of 72.

For example, if you know the revenue will grow from 100M to 400M in 12 years and you need to know the CAGR:

  1. 100M will double and grow to 200M in 6 years
  2. CAGR = 72 / 6 / 100 = 12%
  3. Note that you can take 70-72 depending on what is easier to calculate

Best

Andrea
Expert
replied on 04/02/2018
Former BCG decision round interviewer with 300+ real interviews in 8 years

The “rule of 72” will help you know when, given an average yearly return, the principal will double (72 / avg yearly return = # of years to double principal). However, to have a precise

answer the calculation will be required.

Hope this helps,

Andrea

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