This online CAGR calculator allows you to easily calculate the Compound Annual Growth Rate (CAGR) of an investment or a business metric of interest such as sales or revenue. CAGR is a measure of the growth rate of an investment over a period of time, expressed as a percentage.
Using the CAGR calculator
This calculator can be used to compute growth over any period, whether it be daily, weekly, or monthly. To use it, enter the initial value, final value, and the number of time periods (in days, weeks, or months) for which you want to calculate the CAGR. The calculator will then calculate the CAGR for the given period and provide you with the result as a percentage.
Our CAGR calculator is an easy-to-use tool that helps you calculate the average rate of growth of an asset over a period of time. To use it, enter the following information:
- Initial value: The value of the investment or business revenue at the beginning of the time period of interest.
- Final value: The current value of the investment or business revenue, or the final value of the asset at the end of the period of interest.
- Number of periods: The number of time periods (e.g. years, months) over which the value has grown.
Once you have entered these values, press “Calculate” to see the present value and the Compound Annual Growth Rate (CAGR). The CAGR is the annual rate at which an investment or business metric has grown over the given period.
What is CAGR?
The Compound Annual Growth Rate (CAGR) is a measure of the average annual growth rate of an asset, investment, business metric such as sales, revenue, clients, users, units produced or delivered, etc. over a period of time. It can be calculated for any period, including years, quarters, months, or weeks. CAGR is useful for comparing growth rates across different data sets in a common domain, such as the revenue growth of companies in a particular industry or different divisions within the same enterprise.
CAGR is commonly reported in investment fund results to compare the performance of investment advisors, historical returns of stocks and bonds or savings accounts, and to communicate the rate of increase or decrease of business metrics such as sales, costs, market share, and customer satisfaction. To learn more about CAGR and how it can be used, you can check out our extensive article on the topic.
Compound annual growth rate (CAGR) formula
The formula for Compound Annual Growth Rate (CAGR) is:
CAGR = (End Value / Start Value)^(1/n) – 1
Where: End Value = the final value of the investment or business metric Start Value = the initial value of the investment or business metric n = the number of years (or other time periods) over which the growth is being calculated
CAGR is a measure of the average annual growth rate of an asset, investment, or business metric over a period of time. It is calculated by taking the end value of the investment or metric, divided by the start value, raised to the power of 1/n, and then subtracting 1. The result is expressed as a percentage, and can be used to compare growth rates across different data sets in a common domain.
Compound growth calculation example
The above example provided a single calculation for CAGR. Now, let’s examine the impact of different financial parameters on the CAGR calculation.
For instance, consider an investment of $10,000 made five years ago, and we want to determine the compound annual growth rate over those five years. The table below shows the CAGR for several different final values.
As we can see from the table, the final value greatly impacts the CAGR. With a higher final value, the CAGR increases, and it is a higher rate of return on investment.
It’s important to note that, CAGR is a measure of the average annual growth rate, and it takes into account the compounding effect of the investment over the given period, hence it provides a better representation of the overall performance of an investment rather than the absolute return.