Five year historical compound rate for MSFT & GOOG

May 18

A review of the stock price and growth rate for Microsoft and Google over the past five years shows that they track very closely in general. However, the last year shows a marked deviation from this tracking as Microsoft stayed mainly flat and Google demonstrated strong growth.

Using the data from the source above, we can project the anticipated stock price in 2018 if the growth rate remains constant over that time.

Company Stock May 2008 Current Stock Effective Rate Stock May 2018
Google 580.07 909.18 56.74% 1425.05
Microsoft 29.99 34.87 16.27% 40.54

Here are the calculations used to arrive at the effective rates shown above (click to enlarge).

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Alternate approach

In the example above, IĀ calculateĀ the effective rate based on the delta between May, 2008 and May, 2013. Another approach would be to start with the stock price five years ago and use Excel to find the annual rate (assuming annually compounding interest). In this case we get the following details.

Company Annual Rate -5Y Today +5Y
Google 9.40419% 580.07 909.18 1,425.02
Microsoft 3.0615% 29.99 34.87 40.55

The answers come out the more or less the same, but it helps to know what the annual interest rate is, not just the effective rate over the five year window.

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