Annual Growth Rate Calculator

Annual Growth Rate Calculator

Calculate simple growth and Compound Annual Growth Rate (CAGR)

Required for CAGR calculation

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Understanding the Annual Growth Rate

Measuring growth is essential for evaluating the performance of investments, business revenue, or population changes over time. While simple growth tells you the total increase, the Compound Annual Growth Rate (CAGR) provides a much clearer picture by showing the smoothed annual rate of return as if the growth had compounded over the specific period.

The Formulas

This calculator uses two primary mathematical models to determine your growth:

• Total Percentage Growth: ((Ending Value - Starting Value) / Starting Value) × 100
• CAGR Formula: [(Ending Value / Starting Value) ^ (1 / Number of Years) - 1] × 100

Practical Example

Imagine you invested in a startup or purchased shares with an initial value of 10,000. After 5 years, that investment is now worth 25,000.

1. Starting Value: 10,000
2. Ending Value: 25,000
3. Years: 5

The Total Percentage Growth would be 150%. However, the CAGR would be 20.11%. This means your investment grew by approximately 20.11% every single year for five years straight.

Why Use CAGR Instead of Simple Average?

Simple averages can be misleading when dealing with volatility. For instance, if an asset grows 50% in year one and drops 25% in year two, the simple average is 12.5%. However, your actual geometric growth (the CAGR) is lower. CAGR provides a consistent "benchmark" that ignores year-to-year fluctuations, making it easier to compare different assets or business units over identical timeframes.

function calculateGrowth() { var initial = parseFloat(document.getElementById('initialValue').value); var final = parseFloat(document.getElementById('finalValue').value); var years = parseFloat(document.getElementById('years').value); var resultsDiv = document.getElementById('results'); var totalDisplay = document.getElementById('totalGrowthDisplay'); var cagrDisplay = document.getElementById('cagrDisplay'); var descDisplay = document.getElementById('growthDescription'); if (isNaN(initial) || isNaN(final) || initial 0) { var cagr = (Math.pow((final / initial), (1 / years)) – 1) * 100; cagrDisplay.innerText = cagr.toFixed(2) + '%'; var absoluteChange = final – initial; var direction = absoluteChange >= 0 ? "increase" : "decrease"; descDisplay.innerHTML = "Over a period of " + years + " years, your value had an absolute " + direction + " of " + Math.abs(absoluteChange).toLocaleString() + ". The annual compounded rate required to achieve this result is " + cagr.toFixed(2) + "%."; // Color coding for CAGR if (cagr >= 0) { cagrDisplay.style.color = "#28a745"; } else { cagrDisplay.style.color = "#dc3545"; } } else { cagrDisplay.innerText = "N/A"; descDisplay.innerText = "Please enter the number of years to calculate the CAGR (Compound Annual Growth Rate)."; } resultsDiv.style.display = 'block'; }