CAGR formula - Ajit

[Guest]

What is formula for CAGR (Compounded Annual Growth Rate)? e.g. if I take
a unit of Rs.10/- the price of which increases to Rs.13/- after 3 years, what
is the CAGR? Is there any readymade function to calculate CAGR in Excel?
Ajit

 

[Harlan Grove]

What is formula for CAGR (Compounded Annual Growth Rate)? e.g. if I take
a unit of Rs.10/- the price of which increases to Rs.13/- after 3 years,
what is the CAGR? Is there any readymade function to calculate CAGR in
Excel?

=(13/10)^(1/3)-1

Or if you believe you must use a formula,

=RATE(3,0,-10,13)

 

[Guest]

What is formula for CAGR (Compounded Annual Growth Rate)? e.g. if I take
a unit of Rs.10/- the price of which increases to Rs.13/- after 3 years, what
is the CAGR? Is there any readymade function to calculate CAGR in Excel?
Ajit

Ajit, try this formula:

=+(E3/B3)^(1/(COUNT(B3:E3)-1))-1

Where E3 is the last year for your CAGR calc & B3 is the beginning year.
The count function will determine the number of years the CAGR is based on.
It is derived from the following equation:

CAGR = (Ct /C0)(1/t)-1
In other words for a 3 year CAGR take the value in year three and divide by
the value in year zero. Then take that result and raise it to the 1/3 power.
Then subtract one.

I hope this helps! John