Calculate Compound Annual Growth Rate

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Compound Annual Growth Rate (CAGR) Calculator

Calculate CAGR:

What is Compound Annual Growth Rate (CAGR)?

The Compound Annual Growth Rate (CAGR) is a metric used to measure the average annual growth of an investment or a business metric over a specified period longer than one year. It smooths out the volatility of year-to-year returns, providing a more stable and representative measure of growth. CAGR is essentially a geometric progression growth rate, representing the constant rate at which an investment would have grown if it had grown at a steady rate over the period.

CAGR is particularly useful for comparing the performance of different investments or business segments over the same time frame, as it normalizes for the compounding effect and varying growth rates. It's widely used in finance, business analysis, and economics to project future trends based on historical performance.

The formula for CAGR is:

CAGR = ( (Ending Value / Beginning Value) ^ (1 / Number of Years) ) – 1

A positive CAGR indicates growth, while a negative CAGR indicates a decline. It is always expressed as a percentage.

How to Use the Calculator

  1. Beginning Value: Enter the initial value of your investment or metric at the start of the period.
  2. Ending Value: Enter the final value of your investment or metric at the end of the period.
  3. Number of Years: Enter the total number of years over which the growth occurred.
  4. Click "Calculate CAGR" to see the result.

Example Calculation:

Let's say you invested $10,000 in a stock at the beginning of 2020. By the end of 2023 (4 years), your investment has grown to $18,000. To calculate the CAGR:

  • Beginning Value: $10,000
  • Ending Value: $18,000
  • Number of Years: 4

Using the calculator with these values will show you the average annual growth rate of your investment over those four years.

function calculateCAGR() { var beginningValue = parseFloat(document.getElementById("beginningValue").value); var endingValue = parseFloat(document.getElementById("endingValue").value); var numberOfYears = parseInt(document.getElementById("numberOfYears").value); var resultElement = document.getElementById("result"); if (isNaN(beginningValue) || isNaN(endingValue) || isNaN(numberOfYears) || numberOfYears <= 0 || beginningValue <= 0) { resultElement.innerHTML = "Please enter valid positive numbers for all fields, with Number of Years greater than 0."; return; } var cagr = Math.pow((endingValue / beginningValue), (1 / numberOfYears)) – 1; resultElement.innerHTML = "CAGR: " + (cagr * 100).toFixed(2) + "%"; }

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