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Compound Annual Growth Rate (CAGR) Calculator

The Compound Annual Growth Rate (CAGR) is a crucial metric for evaluating the performance of an investment or business over a period of time. It represents the average annual rate at which an investment has grown, assuming that profits were reinvested at the end of each year of the investment's lifespan. CAGR smooths out volatility and provides a more stable measure of growth than simple average returns.

Understanding CAGR

CAGR is particularly useful because it:

  • Accounts for compounding: It considers the effect of reinvesting earnings, which is fundamental to long-term wealth building.
  • Provides a steady growth rate: It bypasses the year-to-year fluctuations that can be misleading when looking at raw annual returns.
  • Enables comparison: It allows for easy comparison of the historical performance of different investments or business ventures over the same time period.

The CAGR Formula

The formula for calculating CAGR is:

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

  • Ending Value: The value of the investment at the end of the period.
  • Beginning Value: The value of the investment at the start of the period.
  • Number of Years: The total duration of the investment period in years.

How to Use the Calculator

To use the CAGR calculator, simply enter the following values:

  1. Beginning Investment Value: The initial amount invested or the starting value of your business metric.
  2. Ending Investment Value: The final value of your investment or business metric after the specified period.
  3. Number of Years: The total number of years over which the growth occurred.

Click the "Calculate CAGR" button to see your compound annual growth rate.









function calculateCAGR() { var beginningValue = parseFloat(document.getElementById("beginningValue").value); var endingValue = parseFloat(document.getElementById("endingValue").value); var numberOfYears = parseFloat(document.getElementById("numberOfYears").value); var resultDiv = document.getElementById("result"); resultDiv.innerHTML = ""; // Clear previous results if (isNaN(beginningValue) || isNaN(endingValue) || isNaN(numberOfYears) || beginningValue <= 0 || numberOfYears <= 0) { resultDiv.innerHTML = "Please enter valid positive numbers for all fields."; return; } if (endingValue < 0) { resultDiv.innerHTML = "Ending value cannot be negative."; return; } var cagr = Math.pow((endingValue / beginningValue), (1 / numberOfYears)) – 1; // Display result as a percentage resultDiv.innerHTML = "

Your Compound Annual Growth Rate (CAGR):

" + (cagr * 100).toFixed(2) + "%"; }

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