body {
font-family: -apple-system, BlinkMacSystemFont, "Segoe UI", Roboto, Helvetica, Arial, sans-serif;
line-height: 1.6;
color: #333;
max-width: 800px;
margin: 0 auto;
padding: 20px;
}
.calculator-wrapper {
background-color: #f8f9fa;
border: 1px solid #e9ecef;
border-radius: 8px;
padding: 25px;
margin-bottom: 40px;
box-shadow: 0 4px 6px rgba(0,0,0,0.05);
}
.calc-header {
text-align: center;
margin-bottom: 25px;
}
.calc-header h2 {
margin: 0;
color: #2c3e50;
}
.input-group {
margin-bottom: 15px;
}
.input-group label {
display: block;
margin-bottom: 5px;
font-weight: 600;
color: #495057;
}
.input-group input {
width: 100%;
padding: 10px;
border: 1px solid #ced4da;
border-radius: 4px;
font-size: 16px;
box-sizing: border-box;
}
.input-group input:focus {
border-color: #4dabf7;
outline: none;
box-shadow: 0 0 0 3px rgba(77, 171, 247, 0.2);
}
.btn-calc {
width: 100%;
padding: 12px;
background-color: #228be6;
color: white;
border: none;
border-radius: 4px;
font-size: 16px;
font-weight: bold;
cursor: pointer;
transition: background-color 0.2s;
margin-top: 10px;
}
.btn-calc:hover {
background-color: #1c7ed6;
}
#cagr-results {
margin-top: 25px;
padding: 15px;
background-color: #fff;
border-radius: 4px;
border-left: 5px solid #228be6;
display: none;
}
.result-row {
display: flex;
justify-content: space-between;
align-items: center;
margin-bottom: 10px;
padding-bottom: 10px;
border-bottom: 1px solid #eee;
}
.result-row:last-child {
border-bottom: none;
margin-bottom: 0;
padding-bottom: 0;
}
.result-label {
color: #666;
}
.result-value {
font-weight: bold;
font-size: 1.2em;
color: #2c3e50;
}
.result-main {
font-size: 1.5em;
color: #228be6;
}
.article-content h1 {
color: #2c3e50;
font-size: 2.2em;
margin-bottom: 20px;
}
.article-content h2 {
color: #34495e;
margin-top: 30px;
border-bottom: 2px solid #eee;
padding-bottom: 10px;
}
.article-content h3 {
color: #495057;
margin-top: 20px;
}
.article-content p {
margin-bottom: 15px;
}
.formula-box {
background-color: #e7f5ff;
padding: 15px;
border-radius: 4px;
font-family: "Courier New", Courier, monospace;
margin: 20px 0;
border: 1px solid #a5d8ff;
}
.excel-table {
width: 100%;
border-collapse: collapse;
margin: 20px 0;
}
.excel-table th, .excel-table td {
border: 1px solid #dee2e6;
padding: 10px;
text-align: left;
}
.excel-table th {
background-color: #f1f3f5;
}
.error-msg {
color: #e03131;
font-size: 0.9em;
margin-top: 5px;
display: none;
}
function calculateCAGR() {
var startVal = document.getElementById('startValue').value;
var endVal = document.getElementById('endValue').value;
var years = document.getElementById('periodYears').value;
var errorDiv = document.getElementById('yearsError');
var resultDiv = document.getElementById('cagr-results');
// Parse inputs
var start = parseFloat(startVal);
var end = parseFloat(endVal);
var n = parseFloat(years);
// Validation
if (isNaN(start) || isNaN(end) || isNaN(n)) {
alert("Please enter valid numbers in all fields.");
resultDiv.style.display = "none";
return;
}
if (n <= 0) {
errorDiv.style.display = "block";
resultDiv.style.display = "none";
return;
} else {
errorDiv.style.display = "none";
}
if (start === 0) {
alert("Beginning Value cannot be zero for CAGR calculation.");
resultDiv.style.display = "none";
return;
}
// Calculation Logic: CAGR = (End / Start)^(1/n) – 1
var cagrDecimal = Math.pow((end / start), (1 / n)) – 1;
var cagrPercent = cagrDecimal * 100;
// Total Growth Logic: (End – Start) / Start
var totalGrowthDecimal = (end – start) / start;
var totalGrowthPercent = totalGrowthDecimal * 100;
// Difference
var diff = end – start;
// Display Results
document.getElementById('resultCAGR').innerHTML = cagrPercent.toFixed(2) + "%";
document.getElementById('resultTotalGrowth').innerHTML = totalGrowthPercent.toFixed(2) + "%";
document.getElementById('resultDiff').innerHTML = diff.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
resultDiv.style.display = "block";
}
How to Calculate Compound Annual Growth Rate (CAGR) in Excel
The Compound Annual Growth Rate (CAGR) is one of the most accurate ways to calculate and determine returns for anything that can rise or fall in value over time. Unlike a simple average, CAGR smoothes out the volatility of returns periods, giving you a clearer picture of an investment's annual growth rate assuming it had grown at a steady rate.
While the calculator above provides an instant result, many financial analysts and business owners prefer to build these calculations directly into their spreadsheets. This guide covers the mathematical formula and two distinct methods to calculate CAGR in Excel.
The CAGR Formula
Before diving into Excel functions, it is helpful to understand the math occurring in the background. The formula requires three specific inputs: the Beginning Value, the Ending Value, and the Number of Periods (usually years).
CAGR = ( Ending Value / Beginning Value ) ^ ( 1 / n ) – 1
Where n is the number of years or periods.
Method 1: Using the RRI Function in Excel
The easiest way to calculate CAGR in Excel is using the built-in RRI function. This function returns an equivalent interest rate for the growth of an investment.
Syntax: =RRI(nper, pv, fv)
- nper: The number of periods (Years).
- pv: Present Value (Beginning Value).
- fv: Future Value (Ending Value).
Example Scenario
Imagine you invested $10,000 in 2018, and by 2023, the investment was worth $15,000.
| Row |
Column A (Label) |
Column B (Data) |
| 1 |
Beginning Value |
10000 |
| 2 |
Ending Value |
15000 |
| 3 |
Number of Years |
5 |
| 4 |
CAGR |
=RRI(B3, B1, B2) |
The result in cell B4 would be approximately 0.0845, or 8.45% when formatted as a percentage.
Method 2: Using the POWER Function (Manual Formula)
If you prefer not to use the RRI function, or if you are using an older version of Excel that might not support it, you can replicate the mathematical formula manually using the POWER function or the exponent operator (^).
Excel Formula:
=(Ending_Value / Beginning_Value)^(1 / Number_of_Years) – 1
Using the same cell references as the table above:
=(B2 / B1)^(1 / B3) – 1
Why Use CAGR Instead of Average Return?
CAGR is superior to simple average returns because it accounts for the effects of compounding. A simple average does not account for the fact that an investment value changes effectively every year.
- Volatility Smoothing: It ignores the bumpy ride of volatility and gives you a single number representing the geometric mean.
- Comparability: It allows you to compare the growth rates of two different investments over the same time period effectively, even if one is highly volatile and the other is steady.
Common Errors When Calculating CAGR
When performing these calculations in Excel or manually, watch out for these common issues:
- Incorrect Time Periods: Ensure "n" represents the actual duration. If you are calculating from Jan 1, 2020, to Jan 1, 2021, that is 1 year, not 2.
- Negative Beginning Values: The standard CAGR formula breaks down mathematically if the starting value is negative or zero (division by zero or calculating roots of negative numbers).
- Formatting: Excel results often appear as decimals (e.g., 0.08). Remember to click the "%" button in the Home ribbon to format the cell correctly.
Whether you use the RRI function for speed or the manual Power formula for transparency, mastering the calculation of CAGR in Excel is a fundamental skill for financial analysis and portfolio management.