r = Rate of interest, expressed in %
n = Number of years
In our example,
A = 200
r = The annual growth rate (that we want to find out)
n = 4 years
From the above formula, we find out that r is around 19%.
A = 20000
r = Rate of return to be found out
n = 20 years,
Using the formula above, we find out that the rate is actually 7.5% per annum. Now, that’s quite far from 10.5%.