CAGR Calculator

Our CAGR calculator is developed to calculate the compound annual gain of an investment over a specified period of time. By compound annual growth rate calculator you can analyze the performance of investments such as stocks, mutual funds, and other financial instruments.

What is CAGR?

CAGR is the short form of Compound Annual Growth Rate.

"It is a financial metric used to assess the average annual growth of your investments throughout a specified duration, assuming that the investment has been compounding steadily at that rate annually"

Compound Annual Growth Rate (CAGR) is considered useful for investors because it is the measurement of average rate of return you have earned on your investment.

CAGR Formula:

For CAGR of an investment, divide end of the period value by the beginning value of that period and then raise the result to an exponent of one divided by the number of years and subtract one from the result.

\(CAGR = \left( \frac{{\text{Ending Value}}}{{\text{Beginning Value}}} \right)^{\frac{1}{\text{Number of Years}}} - 1\)

Where:

• EV _ Investment's ending value
• SV _ Investment's starting value
• n _ Number of investment periods

How Do You Calculate CAGR (Compound Annual Growth Rate)

To calculate CAGR online, you would need the beginning and ending values of the investment, as well as the number of years over which the growth occurred.

Example:

Suppose you invested $10,000 in a mutual fund five years ago, and it has grown to $15,000 today. Using our average growth rate calculator, let's determine the compound annual growth rate (CAGR) of your investment.

Solution:

Given Values:

• Begining Value (BV) = $10,000
• Ending Value (EV) = $15,000
• Number of Years (n) = 5

Formula:

\(CAGR = \left( \frac{{\text{EV}}}{{\text{BV}}} \right)^{\frac{1}{\text{n}}} - 1\)

Inserting The Values:

\(CAGR = \left( \frac{{\text{15,000}}}{{\text{10,000}}} \right)^{\frac{1}{\text{n}}} - 1\)

\(CAGR = \text{(1.5)}^{0.2} - 1\)

\(CAGR ≈ 1.1487 - 1\)

\(CAGR ≈ 0.1487\)

Additional Queries:

What Is a Good CAGR Percentage?

What Is 10% CAGR Return?

10% compound annual growth rate return means that you earn 10% interest every year and then you get 10% return on your total amount.

Is CAGR The Same As Average Annual Growth Rate?

The average annual growth rate shows the yearly increase of average in particular variables without considering the compounding factors.

Can CAGR Be Negative?

Yes, a negative compound annual growth rate signifies a decrease in value over time rather than gains.

Compound Average Growth Rate Chart: