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Calculate the cumulative average growth rate for a quantity over a specified period

This calculator helps you calculate the cumulative average growth rate (CAGR). The CAGR is not only restricted to finance or business. It can also apply to anything that grows over time, e.g. increase in the number of schools per year, growth of research funds etc

How to use this calculator

  1. Enter your initial value, e.g. the value invested

  2. Enter the final value, e.g. the value of the investment after 5 years

  3. Enter the time period, e.g. 5 years

What is cumulative average growth rate (CAGR)?

The cumulative average growth rate (CAGR) is the average rate at which an investment (or anything else) changes by assuming compounding effects, e.g. if an investment doubles in 5 years (100% growth), then the CAGR would be 14.86% per year rather than 20%. It is useful in comparing growth rates with each other.

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When should I use CAGR?

In the financial sense, CAGR can be used when evaluating the growth rate of a lumpsum investment. CAGR is useful when someone wants to find out the average growth rate of an investment over a period of time provided that growth is compounded. Time "t" could be either whole numbers larger than 0 (1, 2, 3....) or even in fractions (0.5, 1.2, 3.6 etc). CAGR is useful especially when the duration (time) is large. CAGR is not useful for assessing the returns on a series of investments made over time.

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How is CAGR estimated?

The formula that can be used to estimate the CAGR along with an explanation of the  terms is provided above. This formula assumes compounding growth. Basically it is the same formula as for compounding growth but with the terms rearranged to solve for CAGR based off the starting and end value, duration and duration.

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What is an example of CAGR?

Assuming a starting value of ₹1,00,000 and a final investment value of ₹500,000, here are some outcomes, i.e. CAGR for different periods of time:

1.      5 years: 37.97%

2.      10 years: 17.46%

3.      15 years: 11.33%

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CAGR is not only restricted to finance and investments. It can be calculated for many other things as well, e.g. growth in sales over time, growth of a population, spread of disease, forecasting, estimating market share growth, comparing performance of different investments, GDP across time, etc.

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Why is this CAGR calculator useful?

This CAGR calculator is useful as it can help with retirement planning or investment planning. It's also a good way for beginners and professionals alike to get a feel of the effects of compounding and to make better decisions.

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How do I use this calculator?

Instructions to use this CAGR calculator are provided above.

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