How to Calculate Average Increase

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Average increase refers to the average rate of growth that a variable experiences within a given period. You can apply the math and theory behind average increase to many real-life situations, such as speed, finances or population growth. Calculating average growth rate involves basic algebra and is possible as long as there are finite start and end values.

Step 1: Establish the Initial and Final Values

Locate the starting value and final value for a given time period in your situation. Label the starting value as V1 (first value) and label the final value as V2 (second value).

Step 2: Determine the Total Change

Subtract V1 from V2. The equation thus far is: V2-V1.

Step 3: Determine the Percentage Change

Divide the value you determined by V1 to get the total percentage change. The equation now looks like this: (V2-V1)/V1.

Step 4: Determine Percentage Change as a Function of Time

Divide the value you calculated by the total number of units of time change. This can be in any time unit, such as years, hours or minutes. The equation is now: [(V2-V1)/V1]/(time).

Step 5:  Determine the Annual Percent Change

Multipy the final value you calculated to determine the annual increase in percent. The final equation becomes then: {[(V2-V1)/V1]/(time)} * 100.

An example of this calculation would be an investment that increases from $50 to $100 in 10 years. V1 is $50. V2 is $100, and the time is 10 years. {[(100-50)/50]/10} * 100 = 10% average increase per year.

References

About the Author

Bailey Richert is a 2010 graduate of Rensselaer Polytechnic Institute with a dual bachelor's degree in environmental engineering and hydrogeology, as well as a master's degree in systems engineering. After several years in the environmental consulting industry, she is now attending MIT for graduate school. An accomplished traveler, she has visited 23 countries and published her first book about international travel in 2014.

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