CAGR Calculator 📈
Use this compound annual growth rate (CAGR) calculator to calculate the average annual growth rate of your investments over a specific period, accounting for the effects of compounding.
Your CAGR Summary
Initial Value
$10,000
Final Value
$20,000
Total Profit
$10,000
CAGR
14.87%
Investment Value Over Time
Investment vs. Profit
Your CAGR Results by Year
| Year | Investment Value ($) | Annual Growth ($) | Cumulative Growth ($) | CAGR (%) |
|---|---|---|---|---|
| 1 | $11,486.98 | $1,486.98 | $1,486.98 | 14.87% |
| 2 | $13,195.08 | $1,708.10 | $3,195.08 | 14.87% |
| 3 | $15,157.17 | $1,962.09 | $5,157.17 | 14.87% |
| 4 | $17,411.01 | $2,253.85 | $7,411.01 | 14.87% |
| 5 | $20,000.00 | $2,588.99 | $10,000.00 | 14.87% |
What is CAGR?
CAGR (Compound Annual Growth Rate) represents the mean annual growth rate of an investment over a specified period of time, considering the effect of compounding.
How is CAGR Calculated?
The formula to calculate CAGR is:
\( \text{CAGR} = \left( \frac{\text{Final Value}}{\text{Initial Value}} \right)^{\frac{1}{n}} - 1 \)
Where:
- \( \text{Initial Value} \) = the initial amount invested
- \( \text{Final Value} \) = the final value of the investment
- \( n \) = the number of years
How to Use the CAGR Calculator
This CAGR calculator helps you estimate the potential growth of your investments over time. Below are detailed instructions on how to use the calculator, along with definitions for each metric and answers to frequently asked questions.
Follow these steps to use the calculator:
- Initial Value: Enter the initial amount you invested.
- Final Value: Enter the final value of your investment.
- Investment Period: Choose to enter the investment period in years or specify the start and end dates.
Frequently Asked Questions (FAQ)
1. What is the difference between CAGR and ROI?
CAGR (Compound Annual Growth Rate) represents the mean annual growth rate of an investment over a specified period of time, considering the effect of compounding. ROI (Return on Investment) measures the total percentage change from the initial investment to the final value, without considering the effect of compounding.
2. How do you calculate CAGR?
The formula for calculating CAGR is:
\( \text{CAGR} = \left( \frac{\text{Final Value}}{\text{Initial Value}} \right)^{\frac{1}{n}} - 1 \)
where \( \text{Final Value} \) is the ending value of the investment, \( \text{Initial Value} \) is the starting value, and \( n \) is the number of years.
3. Why is CAGR important?
CAGR is important because it provides a smooth annualized rate of growth over a specified period of time, which can be useful for comparing the performance of different investments or understanding the growth trajectory of a particular investment.
4. How do you calculate CAGR in Excel?
You can calculate CAGR in Excel using the formula:
= (Ending_Value / Beginning_Value) ^ (1 / Number_of_Years) - 1
To generate more Excel formulas with AI, visit MLQ.ai Excel Formula Generator.
This CAGR calculator provides estimates based on the inputs you provide and assumptions made in the calculation process. Please consider the following:
- These estimates do not guarantee future results and are for illustrative purposes only.
- The calculations assume constant rates of return, which may not reflect actual market conditions.
- Investment returns can vary and may be affected by factors such as market fluctuations, economic conditions, and changes in tax laws.
- The calculator does not account for transaction fees, account fees, or other costs that may impact your returns.
- Past performance of an investment is not indicative of future results.
- We strongly recommend consulting with a qualified financial advisor to assess your individual investment goals and risk tolerance.
By using this calculator, you acknowledge that the calculations are for informational purposes only and should not be construed as financial advice. Please consult with a financial advisor for personalized advice. See our full terms of service for more information.