Stock Growth Rate Calculator
This calculator helps you determine the annual growth rate of a stock investment. Understanding stock growth rate is crucial for evaluating investment performance and making informed decisions.
Understanding Stock Growth Rate
The stock growth rate, often referred to as the Compound Annual Growth Rate (CAGR), measures the average annual rate at which an investment has grown over a specified period, assuming that profits were reinvested at the end of each year. It's a more accurate way to measure performance than simple average growth because it accounts for the effect of compounding.
The formula used is:
CAGR = ( (Final Value / Initial Value) ^ (1 / Number of Years) ) – 1
A positive growth rate indicates that the investment has increased in value, while a negative rate suggests a decrease in value. Investors use CAGR to compare the performance of different investments over time, helping them to identify which assets have historically provided better returns.
function calculateStockGrowth() { var initialValue = parseFloat(document.getElementById("initialValue").value); var finalValue = parseFloat(document.getElementById("finalValue").value); var years = parseFloat(document.getElementById("years").value); var resultDiv = document.getElementById("result"); if (isNaN(initialValue) || isNaN(finalValue) || isNaN(years) || initialValue <= 0 || years <= 0) { resultDiv.innerHTML = "Please enter valid positive numbers for all fields."; return; } if (finalValue < 0) { resultDiv.innerHTML = "Final investment value cannot be negative."; return; } var growthRate = Math.pow((finalValue / initialValue), (1 / years)) – 1; var percentageGrowthRate = (growthRate * 100).toFixed(2); resultDiv.innerHTML = "The Compound Annual Growth Rate (CAGR) is: " + percentageGrowthRate + "%"; }