# CAGR Calculator

CAGR Calculator is used to calculate the Compound Annual Growth Rate, a quick way to smooth out an investmentâ€™s returns

CAGR %:
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The Compound Annual Growth Rate (CAGR)

#### Background Information

What does Compound Annual Growth Rate (CAGR) mean?
The average rate at which the investment grows over a certain period of time is called its compound annual growth rate (assuming that the value has been compounded over that particular time period).
Importance of CAGR
CAGR is often used to calculate the average growth of single investment over a particular period. It can be applied in comparing return on the equity with bonds or saving accounts. It can be used to forecast the future growth of two companies and compare their performance based on the historical data.
Formula

CAGR = (EV / SV)1 / n - 1

Where:-

• EV = Investment's ending value
• SV = Investment's starting value
• n = Number of investment periods (months, years, etc.)
Example

Letâ€™s assume that an investment is starts a value of \$1,000. It grows to \$10,000 in a span 3 years. Then, according to the formula:-

• CAGR = (10000 / 1000) 1 / 3 - 1
• CAGR = 1.1544 or 115.44 %
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