To calculate the Compound Annual Growth Rate (CAGR), you use the provided initial and final values over a specified period.
The formula for CAGR is:
$$\text{CAGR} = \left( \frac{\text{Ending Value}}{\text{Beginning Value}} \right)^{\frac{1}{\text{Number of Years}}} - 1$$
Let's say the beginning value of an investment is $1,000, and the ending value after 5 years is $2,000.
$$\text{CAGR} = \left( \frac{2000}{1000} \right)^{\frac{1}{5}} - 1 = (2)^{\frac{1}{5}} - 1 \approx 0.1487 \text{ or } 14.87\%$$
So, the CAGR for this investment over 5 years is approximately 14.87%.
Yconvert tools are 100% free. We rely only on community support only. ❤