# Compound Annual Growth Rate Calculator

Estimate the average annual growth rate of an investment over a specified period using our online calculator. By inputting the initial value, final value, and the number of years, you can calculate the compound annual growth rate.

## What does CAGR mean?

CAGR refers to the Compound Annual Growth Rate. This measures how much an investment will grow annually over time, accounting for compounding interest. It can be utilized to determine and assess an investment's past performance or predict the returns it could make in the future. CAGR lets you generate an accurate Return on Investment (ROI) rate for whichever investment period you require.

## CAGR Formula

You can calculate the CAGR using your investment's initial value, final value, and time period, i.e., the number of compounding years. To perform the calculation, divide the final value by the initial value. Then, raise the result to the inverse number of years. Finally, subtract 1 from the interim result.

Compound Annual Growth Rate (CAGR) = ( FV / IV )^{1/n} − 1

*Where:*

*FV = Final Value, IV = Initial Value, n = Number of Years.*

For example, if the Initial Value (IV) is 1000, Final Value (FV) is 5000, and the investment period (n) is 10 years, then the Compound Annual Growth Rate (CAGR) can be calculated as follows:

CAGR = (5000 / 1000)^{1/10} − 1 = .17462 = 17.46%

## Compound Annual Growth Rate Calculator Example

Certainly! Here's an example of a Compound Annual Growth Rate (CAGR) calculator that utilizes a table to calculate the CAGR for different investments with different initial and final values over a specified period:

Investment | Initial Value | Final Value | Time Period (years) | CAGR |
---|---|---|---|---|

Investment A | $10,000 | $15,000 | 5 | 8.94% |

Investment B | $5,000 | $7,500 | 3 | 18.92% |

Investment C | $8,000 | $11,000 | 4 | 10.09% |

In this example, we have three different investment scenarios with the respective initial values, final values, and time periods. The calculator calculates the Compound Annual Growth Rate (CAGR) for each investment.

To calculate CAGR, you can use the formula: CAGR = (Final Value / Initial Value)^(1 / Time Period) - 1

For instance, for Investment A with an initial value of $10,000, a final value of $15,000, and a time period of 5 years, the CAGR would be approximately 8.94%.

Similarly, using the same formula, you can calculate the CAGR for Investment B and Investment C based on their respective values and time periods mentioned in the table.

Please note that CAGR is a measure of the average annual growth rate over a specific time period, assuming that the investment grows at a constant rate. It is important to consider other factors such as compounding frequency, inflation, and any fluctuations in value that may impact the actual investment performance.