CAGR Calculator

CAGR Calculator

Yr
CAGR is 37.97%

Compounded Annual Growth Rate or CAGR is a key metric used to evaluate how a business has been performing in its sector. As clear from the name itself, CAGR shows the growth of an enterprise over a specific period of time. It is used for a number of reasons. If you are running a business, CAGR can help you gauge how your business has grown over the last few years. If you are looking to invest in stocks, CAGR enables you to evaluate performance of the stocks and the companies.

In this article, we will learn how CAGR calculation is done, the steps to calculate CAGR online, and what are the benefits of calculating CAGR.

Importance of Calculating CAGR

Both business owners and investors consider CAGR as an important part of their fundamental analysis. 

  • Unlike absolute growth figures that only show you a timeless picture of your organization’s growth, CAGR takes time into account and shows you how your business has grown over successive years, considering the profits of every year are reinvested in the following year. This is also the reason why many investors often call it the growth rate calculator.
  • Investors use CAGR while doing fundamental analysis of a stock. It helps them to evaluate how a particular stock has performed over the years. Although CAGR is not a guarantee that the stock will continue to perform as per its CAGR, it enables you to check how much your investment would have become if you had invested in the stock a few years ago and gains earned every year would be reinvested in the same stock.

Let us now learn the principles and formulas involved in the calculation of CAGR.

How to Calculate CAGR?

The formula used to calculate CAGR of business or investment is as follows:

CAGR = {(FV/OG)^(1/n) - 1}

Here,

  • FV = Final Value of the investment
  • OG = Original Value of the investment
  • n = number of years

Let us understand this with an example:

Suppose you bought 100 units of Reliance stocks at Rs 2,000 each, investing a total of Rs 2,00,000. The stock price zoomed to Rs 2,500 in 2 years, making your investment amount Rs 2,50,000. The CAGR of your investment is as follows:

{(250000/200000)^(1/2) - 1} = 11.8%

The formula uses three variables and requires you to do complex and time consuming calculations. However, all these complications are resolved once you use the CAGR calculator online. It does all the work for you and shows you the CAGR based on your inputs instantly. There are a number of CAGR calculators available online, INDmoney CAGR return calculator is one of them that comes with a simple and easy-to-use interface. Just enter the required details and the calculator will show you the CAGR instantly.

How to Use INDmoney's CAGR Calculator?

Using INDmoney's CAGR calculator is fairly simple. Just follow the couple of steps and you are all done:

Step 1: Type ‘INDmoney CAGR Calculator’ in your browser and open the calculator

Step 2: Enter the original value of investment, final value of investment, and the duration of investment

That’s all! The INDmoney CAGR calculator will show you the results immediately. 

Benefits of Using INDmoney's CAGR Calculator

  • Being a business owner, you can evaluate how your company has been performing over the years. Since CAGR is calculated by reinvesting the profit every successive year, you can also check whether your reinvestments are worthy or not. 
  • On the other hand, if you are an investor and looking to pick up quality stocks for your portfolio, you can use the CAGR calculator to compare different stocks and how they performed in the last few years. Adding CAGR as a part of your fundamental analysis of stocks will enhance your scan and help you to get the best stocks that can perform well in the future. However, note that CAGR is not the indicator of future returns in any sense. It just shows how the company has increased investors’ returns over the past years.
  • The growth calculator or CAGR calculator is accessible online. You can even use the calculator on the go and get everything done quickly. It saves your time and effort from doing manual calculations. You can also change the inputs in the CAGR calculator as many times you want. The feature enables you to conveniently rectify any wrong input.

As of now, you should have got a fair idea of how important CAGR is and why is it necessary know CAGR while taking business or investment decisions. To use a powerful evaluation metric CAGR, you need a way through which you can calculate it in no time. CAGR calculator helps you with the same by calculating CAGR within a moment.

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