4 ms·
Did anybody else have an issue with "She wants to see a 10% growth?", and then Excel autofills the following quarters linearly (+$100 / $200 / $300) not exponen
by JacobAldridge 4y ago
Did anybody else have an issue with "She wants to see a 10% growth?", and then Excel autofills the following quarters linearly (+$100 / $200 / $300) not exponentially (+10%)?
Never extrapolate your cells from just 2 fields folks!
- kqr 4y agoYou'd be surprised how often finance people make this first order Taylor series approximation. And to be honest, the inputs they have to deal with are uncertain enough that in the end, pretending small-percent geometric growth is linear is not going to be the dominating term of the error. In this case... meh. Actual geometric model gives a sum of 5.11 for the year, whereas linear approximation is 5.00 -- an underestimation of just over 2 %. Do you really think the 10 % assumption we went in with is accurate to ± 0.2 percentage points?