> If I invest 100 dollars in you, I want to receive a percentage back after a certain while. You need to be able to give me 103 dollars back the next year just

> If I invest 100 dollars in you, I want to receive a percentage back after a certain while. You need to be able to give me 103 dollars back the next year just to beat inflation, i.e. for this to not have been a complete waste of my time. Yes. > In real terms, this means you need to grow your business by at least 3% in order to give me that return. No. Suppose you want 3%. You give me $100 and I buy $100 worth of goods which I then sell for $106. I give you $3 (there's your 3%), keep $3. That leave me with $100 to buy goods to do it all again. Note that this biz doesn't grow at all but it can throw off 3% as long as I can keep buying at $100 and selling at $106. What about inflation you say? Multiply all the numbers after the initial $100 by your inflation factor the first year and use the updated numbers (and your inflation factor) each subsequent year.