What is a CAGR Calculator?
CAGR Calculator is used for finding the growth rate of an investment.
For calculating the CAGR (Compound Annual Growth Rate), we need an initial amount, the final amount, and the total time for which the money was invested. The CAGR Calculator takes these inputs and calculates the effective annual growth rate achieved by the investment.
What is CAGR or Compound Annual Growth Rate?
CAGR or the Compound Annual Growth Rate is the annual rate of return on an investment when the investment returns are reinvested every year.
For example, an investment of $100, growing at 10% per year, will be worth $110 after 1 year.
After 2 years, the same investment will be worth $121 (i.e. a 10% growth on $110)
After 3 years, the same investment will be worth $133.10 (i.e. a 10% growth on $121)
After 4 years, it will be worth $146.41
..and so on.
Visualizing a 10% compounded annual growth is not quite as intuitive (or correct) as $100, $110, $120, $130, and $140…
The 10% annual compounding causes the growth to look like $100 -> $110 -> $121 -> $133.1 -> $146.41
In fact, back-calculating the growth rate can be even more challenging. If the initial amount is $100, and the final amount is $146.41 after 4 years – the CAGR is 10%. This is something not easy to calculate in a quick time.
Hence, to make your life simple, we have created a free CAGR calculator for you.
How To Calculate CAGR Using The CAGR Calculator?
The CAGR Calculator is easy to use and has a very simple interface.
Fill in the details such as the initial amount, final amount, years, and (optionally) months. For example, we will use $100 as the initial amount, $200 as the final amount, and 8 years as the time period. Press calculate when ready.
The result will be displayed just below, in a matter of less than a second. For the inputs we have provided, we get an answer of 9.05% CAGR.
How To Calculate CAGR in Excel?
If you have Excel installed on your computer, you can use the CAGR formula and create your own CAGR Calculator.
The formula for CAGR is the following:
CAGR = (Final Amount/Initial Amount) ^ (1/Years) – 1
Create cells for the following values: Initial Amount, Final Amount, Years
Cell C4 has the value for ‘Final Amount’, cell C3 has the value for ‘Initial Amount’, and cell C6 has the value for ‘Years’.
Create a cell for the CAGR result.
In the CAGR result cell, type in the formula linking the relevant cells. For example, in my sheet, I have the formula
in the CAGR result cell, which is C8. Optionally, change the result cell data format to percentage.
Done! You have your own simple CAGR Calculator in Excel now.
A Reverse CAGR Calculator can be used to calculate the final amount of an investment when the CAGR (Compound Annual Growth Rate) is known. The reverse CAGR calculator takes the initial amount, CAGR, and the total time of investment as inputs, and computes the final amount (expected at the end of the period).
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