Calculate the CAGR

[Guest]

How can you calculate the CAGR (Compounded Annual Growth Rate)?

Say I have 2 numbers and corresponding dates as follows;

1999 - $10000

2003 - $25000

How can I determine the compounded growth from just this information?

Bruce

 

[mangesh_yadav]

=(25000/10000)^(1/(2003-1999))-1
=25.74%

Manges

 

[Duke Carey]

It's the final number divided by the earlier number raised to the power of 1
over the number of annual periods. Subtract 1 from that result to get the
CAGR. In your case, assuming that both the amounts are beginning of period,
the formula would be

=25000/19000^(1/4) - 1

 

[Guest]

Thanks both of you. They both work. Is there an excel function to calc
compound rates? I remember coming across this some time ago but cannot seem
to find it in the help now...

 

[Mangesh Yadav]

not that I know of. But RATE gives the rate for periodic payments.

Mangesh

 

[N Harkawat]

Yes using RATE function you can get the CAGR as followis: -
=rate(4,0,-10000,25000)
=25.74%

 

[Niek Otten]

=RATE(4,0,-10000,25000)

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Kind Regards,

Niek Otten

Microsoft MVP - Excel