Equivalent annual growth rate

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February 26, 2015 at 8:30 pm #230521
papijs
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Hi could anyone help me with explanation of Equivalent annual growth rate?

I was doing the F9 BPP revision kit exercise RZP Co (FMC, 6/05) and one of the questions requires to analyse both arithmetic mean and equivalent annual growth rates.

I know how the Equivalent annual growth is calculated. BUT i do not understand why Equivalent annual growth ratios are higher that arithmetic mean ratios? Whats the logic behind that?
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