Enter the initial equity, the annual growth rate, and the number of years into the calculator to determine the final equity. This calculator helps in understanding the potential growth of your investment over time.
Equity Growth Formula
The following formula is used to calculate the final equity:
FE = IE * (1 + AGR)^Y
Variables:
- FE is the final equity
- IE is the initial equity
- AGR is the annual growth rate (expressed as a decimal)
- Y is the number of years
To calculate the final equity, multiply the initial equity by one plus the annual growth rate raised to the power of the number of years.
What is Equity Growth?
Equity growth refers to the increase in value of an investment or asset over time. It is an important concept in finance and investing, as it represents the return on investment that an investor can expect to receive. Equity growth can be influenced by a variety of factors, including market conditions, economic trends, and the performance of the underlying asset.
How to Calculate Equity Growth?
The following steps outline how to calculate the Equity Growth.
- First, determine the initial equity (IE) in dollars.
- Next, determine the annual growth rate (AGR) as a percentage.
- Next, determine the number of years (Y) over which the equity will grow.
- Next, gather the formula from above = FE = IE * (1 + AGR)^Y.
- Finally, calculate the Final Equity (FE) in dollars.
- After inserting the variables and calculating the result, check your answer with the calculator above.
Example Problem :
Use the following variables as an example problem to test your knowledge.
Initial Equity (IE) = $10,000
Annual Growth Rate (AGR) = 5%
Years (Y) = 10
