How do you calculate compound annual growth rate (cagr)?
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).
Compound Annual Growth Rate (CAGR) = (Ending Investment Value / Beginning Investment Value)1/n - 1
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 = 1.951/3 - 1
CAGR = 1.2439 - 1
CAGR = 0.2439 or 24.39%
Use our simple financial calculator to find cagr (compound annual growth rate) online.