How to Calculate Average Increase

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:

V_2-V_1

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:

\frac{V_2-V_1}{V_1}

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:

\frac{V_2-V_1}{V_1} × \frac{1}{\text{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:

\frac{V_2-V_1}{V_1} × \frac{1}{\text{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.

\frac{100-50}{50} × \frac{1}{10 \text{ years}}×100 = 10 \% \text{ average increase per year.}

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