Growth Rate (CAGR) calculator

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CAGR Calculator

Initial Value

Final Value

Number of Years

about this: A growth rate calculator, or specifically a Compound Annual Growth Rate (CAGR) calculator, is a tool used to determine the average annual growth rate of an investment over a specified period. The CAGR is a useful measure because it provides a smoothed annual rate of growth, assuming that the investment grows at a steady rate over the given time frame. Here's a breakdown of how a growth rate calculator typically works: Input Parameters: Initial Value (IV): The starting value of the investment. Final Value (FV): The ending value of the investment. Number of Years (n): The duration of the investment in years. Formula: The CAGR formula is used to calculate the annual growth rate: � � � � = ( � � � � ) 1 � − 1 CAGR=( IV FV ​ ) n 1 ​ −1 Where: � � FV is the final value. � � IV is the initial value. � n is the number of years. Calculation: The calculator takes the input values and substitutes them into the CAGR formula to calculate the growth rate. Result: The result is typically displayed as a percentage, representing the average annual growth rate over the specified period. For example, if you invested $1,000 initially and it grew to $1,500 after 3 years, the CAGR would be calculated as: � � � � = ( 1 , 500 1 , 000 ) 1 3 − 1 CAGR=( 1,000 1,500 ​ ) 3 1 ​ −1 The result might be expressed as a percentage, indicating the average annual growth rate over the 3-year period. Keep in mind that CAGR assumes a constant rate of growth over the entire period and doesn't account for volatility or fluctuations within that period. It's a useful metric for comparing the annual growth rates of different investments or assessing the performance of an investment over time.