Compound Annual Growth Rate Calculator
This application its calculations on the Compound Annual Growth Rate formula (CAGR formula). calculate the growth rate, you can determine the profit of your investment over a particular period.
The Formula as,
FV- the future value of the investment,
PV- the initial balance (the present value of the investment),
r- the annual interest rate (in decimal),
m- the number of times the interest is compounded per year (compounding frequency),
t- the numbers of years the money is invested for.From a formal point of view, if the interest is compounded once per year (so m = 1), then r is called the compound annual growth rate (CAGR).
CAGR (Compound Annual Growth Rate)?
The CAGR is an acronym for Compound Annual Growth Rate. CAGR is counted with an assumption that profits are reinvested at the end of each year of its time horizon. The Formula as,
SGR = (FV – PV) / PV * 100
SGR– simple growth rate;
FV- the future value of the investment;
PV- the initial balance (the present value of the investment).
Let us consider, May 2015 you invested $1000. After three years, in May 2018 you closed this investment and got $1300. So the simple growth rate of your investment
SGR = (1300 – 1000) / 1000 * 100
The Answer is SGR= 30%
V = PV (1 + r/m)mt
The interest is compounded on a yearly basis (m = 1) Formula as
FV = PV (1 + CAGR)t
CAGR is the compound annual growth rate.
CAGR is Formula
CAGR = (FV / PV)1 / t – 1
For CAGR initial $1000 investment grew to $1300 over three years (from May 2015 to May 2018).
CAGR = (1300/1000)1/3 – 1
The answer is CAGR= 9.14%