How to calculate compound percentage change

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Discussion Overview

The discussion revolves around calculating compound percentage change over a period, specifically in the context of inflation rates over ten years. Participants explore methods for calculating the final percent change without evaluating each year's change individually.

Discussion Character

  • Mathematical reasoning
  • Technical explanation

Main Points Raised

  • One participant provides a formula for calculating the final percent change using the product of terms derived from individual percentage changes.
  • Another participant inquires about how to handle negative percentage changes in the calculation.
  • A further response clarifies that each term in the product should be adjusted based on whether the percentage change is an increase or a decrease.

Areas of Agreement / Disagreement

Participants have not reached a consensus on how to incorporate negative values into the calculation, indicating that multiple views remain on this aspect.

Contextual Notes

There is an assumption that the method for calculating compound percentage change applies uniformly, but the treatment of negative values remains unresolved.

drdoug
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Example: Inflation over time
Supposed that I want calculate the final percent change in a 10 year period.

(year , % Change) --> (1,3) (2,4) (3,7) (4,3) (5,2) (6,5) (7,4) (8,3) (9,4) (10,6)

How should I calculate the final percent inflation without having to calculate one by one?
 
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100 ( 1.03 * 1.04 * 1.07 ... * 1.06 -1 )
 
sorry for my laziness but how would you calculate with negative values?
 
Each term in the above product is (1 + %change/100).

So for a 3% change (increase) the product term is 1.03, for a 3% decrease you would use 0.97 and so on.
 

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