CAGR Calculator Template in Excel, OpenOffice Calc & Google Sheet to find the compound annual growth rate of your investments over a period.
With the help of this template, you can calculate CAGR for an individual investment for a specific period. Moreover, you can also calculate the future value of an investment based on a given CAGR.
In addition to that, you can calculate the time period your investment will require to achieve your financial goal. Not only that, you can calculate CAGR for multiple investments using this template.
Table of Contents
What is Compound Annual Growth Rate (CAGR)?
CAGR stands for compound annual growth rate. It is the growth rate of an investment assuming reinvestment of profits at the end of each period.
CAGR shows the annual growth rate of an investment over a period greater than 12 months. Businesses widely use it to measure the growth of companies over time.
It should be kept in mind that CAGR only provides the annual growth rate of a company and does not reflect the risk of investment.
CAGR doesn’t depict the actual return rate. Rather, it describes the rate at which our investment might grow if it grows at the same rate every year.
Formula To Calculate CAGR
To find CAGR for an investment, divide the final value of the investment by the beginning value of the investment and multiply it by 1 upon the time period minus 1.
( End Value / Beginning Value ) ^ 1/Time Period in Years – 1
Formula To Calculate CAGR in Excel
You can calculate CAGR in Excel by using any one of the following formulas:
= RRI (nper, PV, FV)
Nper = number of periods.
PV = Beginning Value
FV = End Value
Another way to calculate CAGR is by using the POWER Function:
= POWER (End Value/Beginning Value, 1/Time Period) – 1
Formula To Calculate Monthly CAGR
If you want to calculate monthly CAGR for an investment CARG:
=1* (((End Value / Beginning Value) ^ (1/Time period in months) – 1 ) X 100 )
Modified CAGR Formula
Usually, not every investment is made or sold at the beginning or end of the year. To calculate more accurately, you need to convert calculate is by measuring the number of days to the investment.
Now, sum up all the days and divide by 365 to get accurate years in decimal. Now put this in the CAGR formula given above.
Investment in Company for 5 years
One: 198 days
Two: 365 days
Three: 365 days
Four: 365 days
Five: 101 days
Total Days = 198 + 365 + 365 +365 + 101 = 1394
Years = 1394 / 365 = 3.819 years
Thus, placing this in the formula above and you can get accurate CAGR for the given investment.
Download CAGR Calculator Template (Excel, OpenOffice Calc & Google Sheets)
We have created a simple and easy CAGR Calculator Template with predefined formulas and functions. Just insert a few details and it will automatically calculate Compound Annual Growth Rate for any given investment.
Download your desired format and start using it.
Feel free to contact us for the customization of this template as per your requirement. We also design new templates based on your needs. You can hire us for our services on Fiverr or directly contact us at firstname.lastname@example.org.
Contents of CAGR Calculator Template
This template consists of 4 Calculators: CAGR calculator, Final Value Calculator, Period Calculator, and CAGR Calculator for Multiple Investments.
Let us understand each in detail.
Insert the initial investment amount, the final or current value of the investment, and the period in years.
Using the above CAGR formula the template automatically calculates the Compound Annual Growth Rate for your investment.
To calculate CAGR, the template uses the following formula:
Where D8 is the final/current value, D7 is the beginning value and D9 is the period in years.
Final Value Calculator
For a given CAGR, if you want to calculate the estimated final or future value of an investment, you can use this calculator. This calculation is irrespective of market risks and there can be a difference in actual CAGR.
Similar to the above, insert the initial investment amount, CAGR percentage, and period in years. To calculate the Final Value, the template uses the following formula:
Where G8 is the CAGR percentage, G9 is the tenure/period and g7 is the initial investment amount.
You can also calculate the period given if you already have the beginning value, future/final value, and CAGR.
Insert the initial investment amount, final or current value of the investment, and CAGR. The template automatically calculates the period for your investment.
To calculate the period, the template uses the LN Function in Excel:
Where J8 is CAGR, J7 is initial investment amount and J9 isthe final value.
CAGR Calculator for Multiple Investments
CAGR Calculator for multiple investments helps you to manage and analyze your portfolio of multiple investments. It consists of the following columns:
Insert the purchase price and units. It automatically calculates Purchase Value. Insert the current price of the stock or investment and it will multiply it with the number of units and calculate the Current Value.
Once you insert the duration/period of investment, it will automatically calculate CAGR for you. The cell turns red if the investment has a Negative CAGR.
Uses of CAGR
CAGR helps to determine the rise or fall of your investment returns over time. In simple terms, it shows how much your investment in a company/stock/asset earns yearly for a given interval.
Usually, investors, business investors, and private lenders use CAGR to measure the profitability of various businesses. Often, they measure the growth of earnings, sales, revenue, etc to get a clear picture.
Specifically, it allows us to look at how much an investment has gained or lost over a year or more years. This helps to determine the overall performance of the investment.
Moreover, it is a very useful tool that helps to compare multiple investments. This helps us to choose which company is worth buying.
Limitations of CAGR
- CAGR simply measures past performance. It doesn’t consider the market risks.
- It is incapable of showing the history of highs and lows of any given company as it assumes constant growth throughout the period.
- You cannot predict the future performance of an investment with CAGR. You can make an overview of the past trend and make a guess that investment continues the same growth pattern.
- During adverse market conditions due to natural causes, the CARG misinterprets the value as the company’s growth would represent a false growth rate.
Frequently Asked Questions
What is a healthy CAGR?
For stocks and mutual funds, anything between 15% to 25% over 5 years of investment is considered as a good CAGR. Whereas, for real estate, debentures, and other securities, anything lower than 12% of CAGR makes is a good CAGR.
Which is better CAGR or absolute return?
CAGR is time-bound and measures the rate of growth based on a given timeline. Whereas the absolute return doesn't take into consideration the timeline. It just calculates the amount of return on investment. Both have their own significance. The purpose of calculation defines which one is better.
In other words, measuring absolute value means how many miles we actually traveled, whereas measuring CAGR means how many miles per hour we traveled.
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