Growth calculations appear frequently in consulting cases, especially market sizing, market entry, and investment evaluation cases.
Simple Growth Rate
Formula:
Growth Rate = (New Value - Old Value) / Old Value × 100%Example:
Revenue grew from $100M to $120M.
Growth = ($120M - $100M) / $100M = 20%
Compound Annual Growth Rate (CAGR)
When growth happens over multiple years, use CAGR.
Formula:
CAGR = (End Value / Start Value)^(1/n) - 1Where n = number of years
Approximating CAGR in Your Head
For interviews, you rarely need exact calculations. Use these approximations:
| CAGR | Doubles In |
|---|---|
| 7% | 10 years |
| 10% | 7 years |
| 15% | 5 years |
| 20% | 3.5 years |
The Rule of 72
A powerful shortcut for estimating doubling time:
Years to Double ≈ 72 / Growth Rate
Example: At 12% annual growth, how long to double?
72 / 12 = 6 years
Applying Growth in Cases
Market Sizing with Growth
"The market is $10B today and growing at 8% annually. What will it be in 5 years?"
Quick estimate:
- At 8%, doubles in ~9 years
- In 5 years, grows by about 50%
- $10B × 1.5 = $15B
Exact: $10B × (1.08)^5 = $14.7B ✓
Investment Analysis
"Should we invest $50M in a project that will return $70M in 5 years?"
Calculate implied return:
- $70M / $50M = 1.4x return
- That's ~7% CAGR over 5 years
Compare to company's hurdle rate or alternative investments.
Practice Growth Calculations
Select "Growth & CAGR" mode for focused practice.
Master all case math: Complete Guide