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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 asked on Apr 02, 2018 - 2 answers
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Vlad replied on Apr 02, 2018
McKinsey / Accenture / Got all BIG3 offers / More than 300 real MBB cases / Harvard Business School
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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

great thank you! And if you would want to turn it around? For example a 100 million company is expected to grow for 5% per year for the coming 7 years? — Sam on Apr 03, 2018 (edited)

Andrea
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replied on Apr 02, 2018
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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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