How to Calculate Average Annual Percentage: A Step-by-Step Guide

Learn how to easily calculate the average annual percentage with our simple step-by-step guide.

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To calculate the average annual percentage, follow these steps: Add up all the annual percentages from each year, then divide the total by the number of years. This gives you the average annual percentage. For example, if you have annual percentages of 10%, 15%, and 20% over three years: (10 + 15 + 20) / 3 = 15%.

FAQs & Answers

  1. What is the formula for calculating average annual percentage? The formula is to sum all annual percentages and then divide by the number of years.
  2. Why is calculating average annual percentage important? It helps in assessing the overall growth rate over multiple years, useful for investments and financial planning.
  3. Can you give an example of calculating average annual percentage? Sure! If the annual percentages are 10%, 15%, and 20%, the average is (10 + 15 + 20) / 3 = 15%.
  4. What is the difference between average annual percentage and annual percentage rate? Average annual percentage is a mean value over years, while annual percentage rate indicates the cost of borrowing annually.

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