CAGR Calculator

CAGR, or Compound Annual Growth Rate, is a reliable way to measure how much something, like a company’s sales, revenue, or earnings, has grown over a specific period of time. It represents the average annual growth rate while assuming the growth is compounded, meaning each year’s growth builds on the previous year’s progress. 

CAGR helps analyze the long-term performance of a business or investment by showing consistent growth over time, even if the growth rates vary each year. It is widely used to compare profitability and track the performance of investments or businesses over a fixed duration.

For instance, if you invested ₹10,000 in a mutual fund and it grew to ₹15,625 over 3 years, CAGR helps you determine the average annual growth rate of your investment while assuming the growth is consistent and compounded. In this example, the CAGR would be 15.87% per year, meaning that your investment effectively grew by 15.87% annually, even though the actual growth might have been different each year. This makes CAGR a useful tool to measure and compare long-term investment performance in a simple and clear way.

CAGR is widely used by investors to analyze the growth of an organization or portfolio, particularly when comparing different investment opportunities. 
 

The formula to calculate CAGR is:
CAGR =
Here:

• FV (Final Value): The value of the investment at the end of the period.
• PV (Present Value): The initial investment amount.
• n: The time period of the investment in years.

This formula considers the effect of compounding, offering a more accurate representation of investment growth than absolute returns.

Let’s say you invested ₹1 lakh in a business five years ago, and today, that investment has grown to ₹10 lakh. Here’s how you would calculate the CAGR:

CAGR = (FV / PV) ^ (1 / n) – 1
 

Where:

FV = Final Value = ₹10,00,000
PV = Initial Investment = ₹1,00,000
n = Number of years = 5

Using the formula: CAGR = 0.5849 or 58.49%

This means your investment has grown at an average annual rate of 58.49% over five years.
 

Using a CAGR calculator is straightforward and can save you time and effort in analyzing investment performance. Follow these steps to use the 5Paisa CAGR Calculator:

• Enter the initial investment amount in the designated field.
• Input the final value of the investment.
• Specify the duration of the investment in years.

The calculator will instantly provide you with:

• Initial Investment
• Final Investment Value, and
• CAGR percentage

5Paisa's CAGR Calculator helps you make informed investment decisions by evaluating the growth rate of your assets over time.
 

Evaluate Returns Across Scenarios: Test different scenarios to understand how your investment could perform under varying conditions.

Clear Return on Investment (ROI) Overview: With CAGR, you gain a clear understanding of your return on investment (ROI), enabling better financial planning.

User-Friendly: The tool is easy to use. Simply enter the initial and final investment values along with the time period, and the calculator does the rest.

Compare Stock Performance: Use the CAGR calculator to analyze and compare the growth of individual stocks, peer companies, or entire industries. 

Simplifies Investment Tracking: If you’ve invested in equity funds or other assets, a CAGR calculator allows you to calculate your gains with precision.

Benchmark Against Goals: Compare the CAGR of your investments against expected returns or benchmarks to assess whether they meet your financial objectives.