How to Calculate CAGR?

How do you calculate compound annual growth rate (cagr)?

Compound Annual Growth Rate Calculation

CAGR - Compound Annual Growth Rate is defined as the average growth rate of an investment over a specified time period which is usually longer than 1 year. In simple, it is a measure of growth over multiple time periods. The rate is usually expressed in terms of percentage (%). This short tutorial will teach you how to calculate the cagr (compound annual growth rate).

Formula:
Compound Annual Growth Rate (CAGR) = (Ending Investment Value / Beginning Investment Value)^1/n - 1
Where,
n = Number of Time Periods in Years, Months.

Step 1: Let us assume that,
The ending investment value be Rs.19,500
The beginning investment value be Rs. 10,000
For a period of 3 years.

Step 2: Applying the values in the formula,
CAGR = (19500 / 10000)^1/3 - 1
CAGR = 1.95^1/3 - 1
CAGR = 1.2439 - 1
CAGR = 0.2439 or 24.39%

Use our simple financial calculator to find cagr (compound annual growth rate) online.

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