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Compound Annual Growth Rate (CAGR) Calculator

Use this calculator to determine the Compound Annual Growth Rate (CAGR) of an investment or business over a specified period. CAGR provides a smoothed annual growth rate, assuming profits are reinvested at the end of each period.

function calculateCAGR() { var startingValue = parseFloat(document.getElementById('startingValue').value); var endingValue = parseFloat(document.getElementById('endingValue').value); var numYears = parseFloat(document.getElementById('numYears').value); var resultDiv = document.getElementById('cagrResult'); // Input validation if (isNaN(startingValue) || isNaN(endingValue) || isNaN(numYears)) { resultDiv.innerHTML = 'Please enter valid numbers for all fields.'; return; } if (startingValue < 0 || endingValue < 0 || numYears 0) { resultDiv.innerHTML = 'If the starting value is zero and the ending value is positive, the CAGR is undefined (or infinite).'; return; } if (startingValue === 0 && endingValue === 0) { resultDiv.innerHTML = 'Both starting and ending values cannot be zero.'; return; } // CAGR Calculation: ((Ending Value / Starting Value)^(1 / Number of Years)) – 1 var cagr = (Math.pow((endingValue / startingValue), (1 / numYears)) – 1) * 100; // Convert to percentage // Display result resultDiv.innerHTML = '

Your Compound Annual Growth Rate (CAGR) is:

' + " + cagr.toFixed(2) + '%'; }

What is Compound Annual Growth Rate (CAGR)?

The Compound Annual Growth Rate (CAGR) is a useful business and investment metric that represents the average annual growth rate of an investment over a specified period longer than one year. It smooths out volatile returns and provides a more accurate picture of an investment's performance than simple average growth, as it accounts for the compounding effect.

Why is CAGR Important?

• Smoothed Growth: Unlike simple annual growth, CAGR provides a consistent, hypothetical rate of return that would have been achieved if the investment grew at the same rate every year, assuming profits were reinvested.
• Performance Comparison: It allows for easy comparison of the growth of different investments or businesses over varying time frames.
• Investment Analysis: Investors use CAGR to evaluate the historical performance of stocks, mutual funds, or portfolios.
• Business Planning: Businesses use it to project future growth, analyze revenue trends, or assess the effectiveness of marketing campaigns.

How to Use This CAGR Calculator:

1. Starting Value: Enter the initial value of your investment or business metric at the beginning of the period. This could be your initial investment amount, starting revenue, or asset value.
2. Ending Value: Input the final value of your investment or business metric at the end of the period.
3. Number of Years: Specify the total number of years over which the growth occurred.
4. Calculate CAGR: Click the "Calculate CAGR" button to see the result.

Example:

Let's say you invested $10,000 in a stock five years ago, and its current value is $18,000. To find the CAGR:

• Starting Value: $10,000
• Ending Value: $18,000
• Number of Years: 5

Using the calculator, you would find that the Compound Annual Growth Rate (CAGR) is approximately 12.47%. This means your investment grew at an average annual rate of 12.47% over those five years, assuming all returns were reinvested.

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