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#1 2009-09-11 11:49:32
- finitehelp
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- Registered: 2009-06-21
- Posts: 80
geometric mean
The geometric mean is often used in business and ecnonmics for finding average rates of change, average rates of growth, or average ratios. Given n values(all of which are positive), the geometric mean is the nth root of their product. The average growth factor for money compounded at annual interest rates of 10%, 8%, 9%, 12%, and 7% can be found by computing the geometric mean of 1.10, 1.08, 1.12, and 1.07. Find the average growth factor.
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#2 2009-09-11 12:33:00
- mathsyperson
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- Registered: 2005-06-22
- Posts: 4,900
Re: geometric mean
The method is in the question: just multiply the five values together (you missed 1.09) and take the fifth root of that.
You should get an average growth of around 9.1%.
Why did the vector cross the road?
It wanted to be normal.
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