Enter revenue, stock price, or population at the start.
Enter the value exactly 5 years later.
function calculateGrowth() {
var startVal = parseFloat(document.getElementById('initialValue').value);
var endVal = parseFloat(document.getElementById('finalValue').value);
var resultDiv = document.getElementById('result');
// Validation
if (isNaN(startVal) || isNaN(endVal)) {
resultDiv.style.display = 'block';
resultDiv.innerHTML = 'Please enter valid numeric values for both fields.';
return;
}
if (startVal === 0) {
resultDiv.style.display = 'block';
resultDiv.innerHTML = 'Initial Value cannot be zero (division by zero error).';
return;
}
if (startVal < 0 || endVal < 0) {
// While mathematically possible, standard CAGR implies positive growth base for this context
resultDiv.style.display = 'block';
resultDiv.innerHTML = 'Warning: This calculator assumes positive asset values for accurate CAGR interpretation.';
// Proceeding with calculation anyway but with warning
}
// Logic for 5 Years
// 1. Total Absolute Growth %
var totalGrowth = endVal – startVal;
var totalGrowthPercent = (totalGrowth / startVal) * 100;
// 2. Compound Annual Growth Rate (CAGR) for 5 years
// Formula: (End / Start)^(1/n) – 1
var n = 5;
var cagrDecimal = Math.pow((endVal / startVal), (1 / n)) – 1;
var cagrPercent = cagrDecimal * 100;
// Display Results
var htmlOutput = '
Calculation Results
';
htmlOutput += '
Initial Value:' + startVal.toLocaleString() + '
';
htmlOutput += '
Final Value (Year 5):' + endVal.toLocaleString() + '
';
htmlOutput += 'This means the value grew at an average compounded rate of ' + cagrPercent.toFixed(2) + '% every year for 5 years.';
resultDiv.style.display = 'block';
resultDiv.innerHTML = htmlOutput;
}
Understanding the 5-Year Growth Rate
Calculating the 5-year growth rate is a fundamental method used in finance, business analysis, and economics to measure performance over a medium-term horizon. Unlike a simple one-year snapshot, a 5-year analysis smooths out short-term volatility and provides a clearer picture of the underlying trend.
When analysts ask "How to calculate 5 year growth rate," they are typically looking for one of two metrics:
Total Percentage Growth: How much the value increased in total from Year 0 to Year 5.
Compound Annual Growth Rate (CAGR): The theoretical steady rate at which an investment would have grown if it had grown at the same rate every year.
The calculator above provides both, but the CAGR is the industry standard for comparing different data sets.
The Mathematical Formulas
1. Total Growth Percentage
This is the simplest calculation. It tells you the absolute percentage increase over the entire period.
((Ending Value – Beginning Value) / Beginning Value) × 100
2. Annualized Growth (CAGR) Formula
This formula requires roots. Since we are calculating for a 5-year period, n = 5.
Note: The carat symbol (^) represents an exponent. In this case, we raise the ratio to the power of 1/5 (or 0.2).
Real-World Example
Let's say a small business had revenue of $500,000 five years ago. Today, their revenue is $850,000.
Step 1: Divide End by Start: 850,000 / 500,000 = 1.7
Step 2: Raise to the power of (1/5): 1.7 ^ 0.2 ≈ 1.112
Step 3: Subtract 1: 1.112 – 1 = 0.112
Step 4: Multiply by 100: 0.112 × 100 = 11.2%
Result: The business grew at a Compound Annual Growth Rate of 11.2%.
Why Use a 5-Year Horizon?
Five years is often considered the "sweet spot" for performance analysis. One year is too short and can be affected by outliers (like a global pandemic or a one-time contract). Ten years might be too long, as market conditions change drastically. A 5-year growth rate demonstrates sustainability and proves that a trend is not merely a fluke.