If an asset declines in value from $5000 to $ 3500 over nine years what is the mean annual growth rate in the asset's value over these nine years?

Answer 1

To calculate the mean annual growth rate (CAGR) of the asset's value, you can use the formula:

[ \text{CAGR} = \left( \frac{\text{Ending Value}}{\text{Beginning Value}} \right)^{\frac{1}{n}} - 1 ]

In this case, the beginning value is $5000, the ending value is $3500, and ( n ) is 9 years. Plugging in the values:

[ \text{CAGR} = \left( \frac{3500}{5000} \right)^{\frac{1}{9}} - 1 \approx -0.0955 \text{ or } -9.55% ]

Thus, the mean annual growth rate over the nine years is approximately -9.55%.