CAGR calculator is a useful tool for anyone who wants to estimate the gain from an investment. The application bases its calculations on the Compound Annual Growth Rate formula (CAGR formula). If you know how to calculate growth rate, you can determine the profit of your investment over a particular period of time.
The article will also explain the following:
- What is the CAGR formula?
- What is the growth rate formula?
- How to calculate growth rate.
- How to use CAGR calculator to determine either CAGR, end value or the start value of an investment.
What is the simple growth rate formula?
The growth rate formula is used to determine the percentage increase of a value within a particular period of time. In other words, how much an investment is going to yield. In order to calculate it you need the following formula:
PR = (V present - V past) / V past x 100
- PR - percent rate
- V present - present value
- V past - past value
What is the CAGR formula?
Now, it's high time to collate the growth rate formula with the CAGR formula:
CAGR = (final value / initial value)1 / number of periods - 1
The latter measurement is more complex and takes into consideration also the period of time which may be longer than a year and the number of compounding periods. Thus, if you have a savings account or a deposit with compound interest, the CAGR formula is more highly recommended. If you need to find out more about compound interest and ways to calculate it, check out our compound interest calculator.
How to calculate growth rate?
- Determine the final value and divide it by the initial value.
- Take the result and raise it to the power of
1 / number of periods.
- Subtract 1 from the result.
- Multiply it by
100to get CAGR expressed as a percentage.
Instead of making many complicated mathematical equations in order to calculate compound annual growth rate, you might like to try our CAGR calculator. You can use the application in a few ways. With CAGR calculator you can determine either the final value of the investment or the growth rate.
The calculator will count the final value of your investment. If you want to use the tool inversely and find the growth rate, you have to fill in all the boxes except the first one.
You can also use the advanced mode of the application. This function gives you the possibility to check the difference between the initial and final value and estimates the total growth in percentage.