function calculateGrowthRate() {
var startValueStr = document.getElementById('startValue').value;
var endValueStr = document.getElementById('endValue').value;
var periodsStr = document.getElementById('periods').value;
var resultElement = document.getElementById('result');
var startValue = parseFloat(startValueStr);
var endValue = parseFloat(endValueStr);
var periods = parseFloat(periodsStr);
if (isNaN(startValue) || isNaN(endValue) || isNaN(periods)) {
resultElement.innerHTML = 'Please enter valid numerical values for all fields.';
return;
}
if (startValue <= 0) {
resultElement.innerHTML = 'Starting Value must be greater than zero.';
return;
}
if (periods <= 0) {
resultElement.innerHTML = 'Number of Periods must be greater than zero.';
return;
}
// Formula for Compound Growth Rate: ((End / Start)^(1 / Periods)) – 1
var base = endValue / startValue;
// Handle cases where ending value is negative, though less common for this type of calc
if (base < 0) {
resultElement.innerHTML = 'Cannot calculate growth rate with a negative ratio.';
return;
}
var exponent = 1 / periods;
var decimalRate = Math.pow(base, exponent) – 1;
var percentageRate = decimalRate * 100;
resultElement.innerHTML = 'Effective Per-Period Growth Rate: ' + percentageRate.toFixed(3) + '%';
}
Understanding Effective Growth Rate
This tool calculates the constant percentage rate required for a starting value to grow to a specific ending value over a defined number of periods, assuming compounding growth. This is mathematically equivalent to finding a Compound Annual Growth Rate (CAGR) when the periods are years.
For instance, if a dataset begins with a value of 5000 and grows to 8500 over the course of 4 periods (e.g., 4 years), you can determine the steady compounding rate that would yield this result. By inputting 5000 as the Starting Value, 8500 as the Ending Value, and 4 as the Number of Periods, the calculator computes the effective rate per period.
The Calculation Formula
The calculator uses the standard geometric progression formula to find the rate:
The resulting decimal is then multiplied by 100 to express it as a percentage. This metric is highly useful for comparing the growth performance of different entities or metrics over varying timeframes on a standardized basis.