Average Annual Growth Rate (AAGR) Calculator
The Average Annual Growth Rate (AAGR) is a simple way to measure the average yearly increase of an investment or metric over a specific period. Unlike Compound Annual Growth Rate (CAGR), AAGR doesn't account for compounding effects. It's calculated by finding the total growth over the period, dividing it by the number of years, and then expressing it as a percentage of the initial value.
How to Calculate AAGR
The formula for Average Annual Growth Rate (AAGR) is:
AAGR = [ (Final Value – Initial Value) / Number of Years ] / Initial Value
Let's break down the steps:
- Calculate Total Growth: Subtract the Initial Value from the Final Value. This gives you the total increase over the entire period.
- Calculate Average Annual Growth: Divide the Total Growth by the Number of Years. This gives you the average increase per year.
- Express as a Percentage: Divide the Average Annual Growth by the Initial Value and multiply by 100 to get the AAGR as a percentage.
While AAGR is straightforward, it's important to remember that it smooths out year-to-year fluctuations. For a more accurate representation of growth that considers compounding, consider using the Compound Annual Growth Rate (CAGR) formula.
Example Calculation:
Suppose you invested $10,000 (Initial Value) and it grew to $15,000 (Final Value) over 5 years (Number of Years).
- Total Growth = $15,000 – $10,000 = $5,000
- Average Annual Growth = $5,000 / 5 years = $1,000 per year
- AAGR = ($1,000 / $10,000) * 100 = 10%
Therefore, the Average Annual Growth Rate for this investment is 10%.
function calculateAAGR() {
var initialValue = parseFloat(document.getElementById("initialValue").value);
var finalValue = parseFloat(document.getElementById("finalValue").value);
var numberOfYears = parseFloat(document.getElementById("numberOfYears").value);
var resultDiv = document.getElementById("result");
if (isNaN(initialValue) || isNaN(finalValue) || isNaN(numberOfYears) || initialValue <= 0 || numberOfYears <= 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
var totalGrowth = finalValue – initialValue;
var averageAnnualGrowth = totalGrowth / numberOfYears;
var aagr = (averageAnnualGrowth / initialValue) * 100;
resultDiv.innerHTML = "
Your Average Annual Growth Rate (AAGR) is: " + aagr.toFixed(2) + "%
";
}
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