Determine the starting value (SV) of an asset, for example, the price paid for a share of stock. Determine the ending value (EV) or current market value of that asset. Determine the period of time (T) you want to study, for example, the number of years, months, quarters, etc. [2] X Research source
For example, if a portfolio of investments had an initial value of $10,000 that grew to $19,500 over 3 years, you would start with CAGR=(($19,500/$10,000)^(1/3))-1 and simplify to CAGR=((1. 95)^(0. 333))-1 and CAGR=1. 249-1. Your final result would be CAGR=0. 249, or 24. 9%.
The easiest way to calculate CAGR in Excel is to simply enter the CAGR formula into a fourth cell. This requires entering the following into D1 (or any other cell you see fit): =((B1/A1)^(1/C1))-1. Excel will complete the calculations for you and the result will be presented in whichever cell you choose for the equation. [5] X Research source An alternate method of calculating CAGR in excel uses the POWER function, which calculates equations using exponents. For this calculation, create a cell for the formula and enter: =POWER(B1/A1,(1/C1))-1. Again, the answer should appear in this cell after you press enter. [6] X Research source Additionally, Excel can calculate CAGR by using the RATE function. Input this formula into a new cell by entering the following: =RATE(C1,-A1,B1). Press enter and Excel will display the answer. [7] X Research source
Determine the starting value (SV) of an asset, for example, the price paid for a share of stock or the current revenues of a company. Determine the period of time (T) you want to study, for example, the number of years, months, quarters, etc. [9] X Research source Enter the CAGR percentage as a decimal. For example, the CAGR percentage of 24. 9% calculated in method one would be entered here at 0. 249.
To calculate this on a computer, use a spreadsheet program and enter the program into an empty cell. For example, a potential calculation in Excel would start with SV in cell A1, CAGR in cell D1, and T in cell C1. To calculate FV, enter the following into an empty cell: =A1(1+D1)^C1 and press enter. [10] X Research source
