Quick Summary
CAGR Calculator: CAGR, full form is Compounded Annual Growth Rate, is a key metric used to assess a business’s performance in a competitive market. It is a useful measure that describes the mean annual growth rate of an investment over a specified time period, assuming the investment grows at a steady rate. It indicates the growth rate of an organisation, allowing you to easily determine its growth trajectory or the absence of it using a CAGR calculator online. While many CAGR calculators are available online, it’s essential to choose one that is user-friendly for calculating CAGR returns effectively.
CAGR, full form Compound Annual Growth Rate, is the average annual growth of an investment over a specific period, assuming steady growth. It shows how much your money would grow each year if it increased at a consistent rate. Unlike absolute returns, CAGR accounts for time, making it a more reliable measure for comparing investments, evaluating business performance, and analysing long-term financial growth.
If you own a business, understanding CAGR can reveal insights that are often overlooked. Unlike “absolute returns,” CAGR considers the time factor, making it a more accurate indicator of growth over a specific period.
So, what is the CAGR Calculator? In simple terms, it is an online tool designed to compute the Compound Annual Growth Rate of your investments. It calculates CAGR while showing you the hypothetical annual rate at which your investment would have grown if it had expanded at a steady pace.
To calculate CAGR, this formula for calculating CAGR is a mathematical method that determines the real-time annual growth rate for any organisation or investment. The values stand for the following:
Let us understand how the formula for calculating CAGR works with the help of an example:
If you have an initial investment of ₹1 Lakh in a business, it constitutes the PV. If the total investment has grown to ₹10 Lakh (FV) after 5 years (N), the CAGR is: (10,00,000/1,00,000)1/5–1=0.589(10,00,000 / 1,00,000)^{1/5} – 1 = 0.589(10,00,000/1,00,000)1/5–1=0.589
Thus, the CAGR percentage is: CAGR×100=58.9%CAGR \times 100 = 58.9\%CAGR×100=58.9%
Using a CAGR calculator online is straightforward. Here’s a step-by-step guide:
The CAGR calculator online will generate the results within seconds as soon as you input the values.
Imagine you planted a small tree in your garden. In the first year, it grew a little. In the second year, it grew more. By the fifth year, it had become a big tree! Now, if you want to know how much it grew every year on average, you can use something called CAGR.
Let’s say you invested ₹1,000 and after 3 years it became ₹2,000. CAGR helps you find out how fast your money grew each year. You don’t have to do the math yourself; just use a CAGR calculator online. You enter the starting amount, the final amount, and how many years it took. The calculator will show you the average growth rate.
The Compound Annual Growth Rate (CAGR calculator online) is an invaluable tool for investors and business owners alike, providing a clear picture of growth over time. By accurately measuring the annual growth rate of investments, the CAGR allows users to make informed decisions based on real performance metrics rather than just absolute returns. Whether you’re assessing business growth, analysing mutual funds, or comparing stock performances, understanding and utilising CAGR can significantly enhance your financial strategy.
In a competitive market, leveraging the insights gained from a CAGR calculator online can empower you to optimise your investment portfolio and drive better financial outcomes.
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Calculate the total number of years or periods over which the growth occurred. Use the formula: CAGR = (Ending Value / Starting Value) ^(1 / Number of Years) – 1.
A CAGR in sales of 5-12 per cent is suitable for large-cap companies. Similarly, for small businesses, a CAGR of 15% to 30% is satisfactory. Furthermore, a company’s CAGR must be consistent over time.
A good CAGR for large companies in an industry ranges from 8% to 12%, whereas high-risk companies aim for a compound annual growth rate between 15% to 25%. 2. What is the CAGR of mutual funds? CAGR is a valuable tool for new investors to assess performance and find the best return mutual fund schemes.
While CAGR measures the annualised compounded return on investment, XIRR measures the average return earned by the investor after factoring in periodic cash flows separately. In conclusion, when it comes to calculating mutual fund returns, the choice between XIRR and CAGR depends on the nature of the cash flows.
But negative CAGR can and does exist. If a portfolio or profits decline over time if they show negative overall growth, then CAGR by definition will be negative. Quite obviously, negative CAGR is not a good thing, for the same reason that negative growth of any kind (with rare exceptions) is not a good thing.
Apple (AAPL) Price CAGR: 27.77% (TTM)
The price CAGR for Apple (AAPL) stock is 27.70% over the past 12 months.
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Authored by, Divya Jain
Content Curator
Divya merges a love for storytelling with instructional design to create content that both educates and inspires. She has written for e-learning platforms, exam prep sites, and student communities, always placing creativity at the core of her work.
Chegg India does not ask for money to offer any opportunity with the company. We request you to be vigilant before sharing your personal and financial information with any third party. Beware of fraudulent activities claiming affiliation with our company and promising monetary rewards or benefits. Chegg India shall not be responsible for any losses resulting from such activities.
Chegg India does not ask for money to offer any opportunity with the company. We request you to be vigilant before sharing your personal and financial information with any third party. Beware of fraudulent activities claiming affiliation with our company and promising monetary rewards or benefits. Chegg India shall not be responsible for any losses resulting from such activities.
