PabloAA007 / Functions

Functions

Finally Functioning

In this activity, you will define a function to calculate compound annual growth rate (CAGR) for an investment portfolio. You are encouraged to work with a partner on this activity.

Background

You have been working with Harold and Sam after hours to further develop your FinTech skills and automate your day jobs.

While fine-tuning your algorithms, you realize that you've written the logic to calculate compound annual growth rate three times: once for 2016, once for 2017, and once for 2018. You're annoyed that you've reinvented the wheel each time, and you're growing concerned that if you make any changes to the algorithm, you'll have to make changes in three different places.

This cannot be maintained. You decide to refactor all of your code to make it as modular and reusable as possible.

In this activity, define a function named calculate_compound_growth_rate that will accept three arguments:

• beginning_balance

• ending_balance

• years

The function should output a float as growth_rate.

Modularize this code so that you can dynamically calculate compound annual growth rate (CAGR) by simply calling a function with the required inputs. The results will indicate how you've been functioning as a trader.

CAGR is valuable, as it calculates and predicts growth rate earnings and percent increase or decrease of a stock, portfolio, or bank account. This will be useful when trying to evaluate portfolio/stock performance or when choosing which savings account might produce the most return.

Compound annual growth rate formula:

Instructions

1. Define a function calculate_compound_growth_rate that takes in beginning_balance, ending_balance, and years as input. Output growth_rate.

2. Initialize beginning_balance to 29000.00.

3. Initialize ending_balance to 45000.00.

4. Initialize years to 1.0.

5. Call calculate_compound_growth_rate() and use the above values (found in Steps 3-5) to calculate and capture the result as year_one_growth.

6. Update beginning_balance to 45000.00.

7. Update ending_balance to 47000.00.

8. Call calculate_compound_growth_rate() and capture results as year_two_growth.

9. Update beginning_balance to 47000.00.

10. Update ending_balance to 48930.00.

11. Call calculate_compound_growth_rate() and capture results as year_three_growth.

12. Use the Python round() function to round year_one_growth, year_two_growth, and year_three_growth. Capture these new values as new variables.

13. Use string formatting to print year_one_growth, year_two_growth, and year_three_growth as percents.

14. Quickly review the values printed on the screen, and identify the year with the highest rate of return.

Challenge

Instead of saving the year_one_growth, year_two_growth, and year_three_growth values in variables, add growth_rate to a global list named growth_rates.

Then, write this logic in a new function calculate_compound_growth_rate_list.

Hints

• Instead of returning the local growth_rate variable, store it in the growth_rates global list object.

• Refer to the W3Schools documentation for the Python round function.

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