# CAGR Calculator

Calculate compound annual growth rate online

 Starting value: (Initial Investment Value) Ending value: (Ending Investment Value) No. of periods: (Months/Years) CAGR (Compound Annual Growth Rate)

## What is Compound Annual Growth Rate (CAGR)

The compound annual growth rate, or CAGR for short, is the average rate at which some value (investment) grows over a certain period of time assuming the value has been compounding over that time period.

## CAGR calculator formula :

The formula for CAGR is:

CAGR = ( EV / SV)1 / n - 1

where:

EV = Investment's ending value
SV = Investment's starting value
n = Number of investment periods (months, years, etc.)

## How CAGR is calculated

We can use the formula above to calculate the CAGR.

Assume an investment’s starting value is \$1,000 and it grows to \$10,000 in 3 years. The CAGR calculation is as follows:

CAGR = (10000/1000)1 / 3 - 1

CAGR = 1.1544

Hence, CAGR percentage = CAGR x 100 = 1.1544 x 100 = 115.44 %

Calculation of CAGR with Excel

## Where CAGR Calculator matters

The compound annual growth are applied at various places of personal finance. It is often used to calculate the average growth of single investment over a certain period. CAGR can be applied in comparing return on equity with bonds or savng accounts. Further, it can be used to compare the performance of two companies and forecasting their future growth based on their historical data.

## Limitation of CAGR

CAGR doesn't accounts for volatility. It calculates only the average percentage return and so CAGR values should never taken as only tool for investment return assessment.