Compound Annual Growth Rate (CAGR) Calculator

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Introduction

The Compound Annual Growth Rate (CAGR) is the annualized average growth rate of an investment over a specific period. The The CAGR denotes an investment’s average growth to attain a desired future value and the Compound Annual Growth Rate (CAGR) Calculator will help you quickly and accurately calculate the CAGR.

The CAGR is also used to measure and compare investments’ past performance and project their future returns. The assumption when calculating CAGR is that all the profits are reinvested at the end of each period over the investment’s life.

How to use the CAGR Calculator?

Using the Compound Annual Interest Rate (CAGR) calculator, you can calculate the CAGR by inputting the variables required for the calculation like Starting Value, Ending Value, and also Number of Years

The variables in the CAGR Calculator are:

Ending Value (E)
The final value of the investment at the end of N years.

Starting Value (S)
The starting value of the investment.

Number of Years (N)
The number of years after which you want the investment to attain the overall ending of final value.

Compound Annual Growth Rate (CAGR)
The average annual growth rate that the investment must grow at so it will attain the final value.

What is the Compound Annual Growth Rate (CAGR)?

The Compound Annual Growth Rate (CAGR) is the annualized average growth of your investment over a specific period.

The Compound Annual Growth Rate (CAGR) is used to compare the performance of funds or investments over time. This is because investments do not grow at the same rate every year, so we need a metric that enables us to compare investments on an annual basis irrespective of what the investment returns every year.

Furthermore, one of the uses of compound annual growth rates is that we can smoothen out the noise in growth rates over the tenure of the investment. But, this is also a disadvantage because the investor is not aware of the riskiness or volatility of the investment returns because of the smoothening effect.

How is the Compound Annual Growth Rate Calculated?

The Compound Annual Growth Rate (CAGR) formula is given by following formula

Compound Annual Growth Rate=((EVSV)1n1)\text{Compound Annual Growth Rate} = \normalsize \bigg(\Bigl(\dfrac{\text{EV}}{\text{SV}}\Bigl) ^\dfrac{1}{n} - 1 \bigg)

Where,

EV → Ending Value of the investment

SV → Starting Value of the investment

n → Number of years

Author

hexacalculator design team

Our team blends expertise in mathematics, finance, engineering, physics, and statistics to create advanced, user-friendly calculators. We ensure accuracy, robustness, and simplicity, catering to professionals, students, and enthusiasts. Our diverse skills make complex calculations accessible and reliable for all users.