Growth Percentage Calculator Over Time

CAGR Formula:

\[ CAGR = \left[\left(\frac{End}{Start}\right)^{\frac{1}{Years}} - 1\right] \times 100 \]

CAGR (%):

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1. What is CAGR?

Compound Annual Growth Rate (CAGR) is the mean annual growth rate of an investment over a specified period of time longer than one year. It represents one of the most accurate ways to calculate and determine returns for anything that can rise or fall in value over time.

2. How Does the Calculator Work?

The calculator uses the CAGR formula:

\[ CAGR = \left[\left(\frac{End}{Start}\right)^{\frac{1}{Years}} - 1\right] \times 100 \]

Where:

$ End $ — Ending value of the investment ($)
$ Start $ — Beginning value of the investment ($)
$ Years $ — Number of years of investment

Explanation: CAGR smooths the growth rate over the specified period, providing a constant rate of return that would be required for an investment to grow from its initial balance to its ending balance.

3. Importance of CAGR Calculation

Details: CAGR is widely used to compare the historical returns of different investments, evaluate business performance, and forecast future growth. It eliminates the volatility of periodic returns and provides a smoothed annual growth rate.

4. Using the Calculator

Tips: Enter the starting value in dollars, ending value in dollars, and the number of years. All values must be positive numbers (start > 0, end ≥ 0, years > 0).

5. Frequently Asked Questions (FAQ)

Q1: What does CAGR measure?
A: CAGR measures the mean annual growth rate of an investment over a specified time period, assuming the investment grows at a steady rate each year.

Q2: How is CAGR different from average annual return?
A: CAGR accounts for compounding effect, while simple average return does not. CAGR provides a more accurate representation of investment performance.

Q3: What are typical CAGR values for investments?
A: Stock market investments typically range from 7-10% CAGR, while more conservative investments may yield 2-4% CAGR. Higher risk investments can achieve 15%+ CAGR.

Q4: What are the limitations of CAGR?
A: CAGR assumes smooth growth and doesn't reflect investment risk, volatility, or the actual year-to-year returns. It's best used alongside other metrics.

Q5: Can CAGR be negative?
A: Yes, if the ending value is less than the starting value, CAGR will be negative, indicating a loss over the investment period.