In this article, we’ll discuss several examples of using the exponential growth formula in Excel. In one method we’ll explain how to use one of Excel’s built-in statistical functions, the GROWTH function with detailed examples. Another method is related to an exponential growth formula that is commonly used in growth calculations.
1. Predicting Exponential Growth Using Excel GROWTH Formula
We can use Excel’s built-in GROWTH function to predict exponential growth in the future by using existing data. Let’s introduce the GROWTH function first.
Description: Assuming y is a function of x, the GROWTH function calculates values of y for a given set of x values. It uses an existing set of x and y values to determine the relationship among them. Then applies it to output y values for a series of new x values based on the determined relation.
The GROWTH function uses the following equation to calculate values:
where y is the intercept from the y axis and m is the slope of the curve.
=GROWTH(known_ys, [known_xs],[new_xs],const )
known_ys – A set of known y values that is a required argument.
known_xs– A set of known x values of the same dimension as of the set of y values and it is an optional argument.
new_xs- A set of new x values for which the function should calculate the predicted y values. It is also optional. If not given the function assumes it as the same length as the set of known x values.
const– If TRUE or omitted, b is calculated normally.
If FALSE, b is set to 1 and the equation is adjusted to y= mx
Now let’s do some examples to understand how to use the GROWTH function in practice.
Example 1: Input-only known_ys
In this example, we just input the known_ys argument to illustrate the growth. Follow the guide below.
- In cells B3:B8 we have a set of y values.
- In cell D3, type =GROWTH( and select cells B3:B8 as known_ys argument.
- And now press Enter.
Here we have the growth in cells D3:D8.
Example 2: Input known_ys and known_xs
In this example, we used two arguments i.e., known_ys and known_xs in the GROWTH function to predict the growth. Let’s see if we get any difference from the previous example.
What we see from the above screenshot is, the growth is the same as that of example 1.
Example 3: Input known_ys, known_xs, and new_xs
Here we also added a new_xs column for which the GROWTH function will predict growth. In cell E3, put the following formula.
where D3:D8 represents new_xs values.
As we described earlier, the GROWTH function predicts values based on the relationship (equation) is found from the existing data, which is illustrated in the following screenshot.
Example 4: Input known_ys, known_xs, new_xs, and const
In the last 3 examples, we omitted the const argument. As a result, the function used the default TRUE value to predict the exponential growth. In the following screenshot, we showed the difference in the growth values for different const arguments.
2. Estimating Future Value Using Exponential Growth Formula in Excel
If we have a quantity (population, profit, investment, etc) that grows at a constant rate during a number of time intervals then we can use an exponential growth formula to predict future growth.
Exponential Growth (y) = a*(1+r)^x
Here, a = Initial value of a quantity, for example, population, profit, investment, etc.
r = Constant annual growth rate of that quantity.
x = Number of time intervals.
Let’s say we have an initial investment of 10,000 dollars. We want to find out the value after 4 years at a constant rate of 6%.
This is the outcome.
Different types of Errors in the GROWTH function
- #NUM!: It occurs when any of the values of the known_ys column is zero or less than zero.
- #VALUE!: This error appears if the known_ys values or known_xs or new_xs have a non-numeric value in it.
- #REF!: Another error happens while using the GROWTH function.
This #REF! error happens if the lengths (dimensions) of the known_ys and known_xs values are not equal.
Use the GROWTH Function as Array.
We can use the GROWTH function as an array function while calculating more than one y value. For this, we just need to put the formula into the cell and then press Ctrl + Shift + Enter.
Download Practice Workbook
Download this practice workbook to exercise while you are reading this article.
Now, we know how to use the exponential growth formula in Excel. Hopefully, it would encourage you to use these methods more confidently. Any questions or suggestions don’t forget to put them in the comment box below.
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