What is a Compound Growth Rate Calculator?
A Compound Growth Rate Calculator is a financial tool used to calculate the Compound Annual Growth Rate (CAGR) of an investment, business revenue, or any metric that grows over time. CAGR is a useful measure for comparing the growth rates of various investments or projects over a consistent time frame.
Why Use a Compound Growth Rate Calculator?
Understanding the growth rate of your investments or business is crucial for informed decision-making. A CAGR calculator simplifies this by providing an accurate and consistent growth metric, enabling you to:
- Compare different investment options.
- Evaluate the performance of your business.
- Make data-driven financial decisions.
How to Calculate CAGR?
The formula for calculating the Compound Annual Growth Rate is:
CAGR = [(Ending Value / Beginning Value)^(1 / Number of Years)] - 1
For example, if you invested $10,000 in a project and its value grew to $20,000 in 5 years, the CAGR is calculated as:
CAGR = [(20,000 / 10,000)^(1 / 5)] - 1 ≈ 14.87%
Using Our Compound Growth Rate Calculator
Our online Compound Growth Rate Calculator is simple and easy to use. Just enter the starting value, ending value, and the number of years, and the calculator will instantly provide the CAGR percentage.
FAQs
Q: What is a good CAGR?
A: A "good" CAGR depends on the context. For investments, a CAGR of 8-12% is typically seen as strong.
Q: Can CAGR be negative?
A: Yes, if the ending value is less than the beginning value, the CAGR will be negative.