What is CAGR?
CAGR is a way to figure out how much your investments have grown on average each year over a certain time period. It tells you how much your investments have earned on average over a year. The CAGR is a useful tool for investors because it shows exactly how investments grow (or shrink) over time. When figuring out CAGR, it is assumed that profits are put back into the business at the end of each year. So, CAGR is a number that represents the compounded return, not the return itself. Most of the time, you can't expect an investment to grow at the same rate every year. Even so, many people use the CAGR calculator to compare different investments.
With this common use of the calculation in mind, investors would do well to find an easy way to figure out CAGR. The CAGR calculator can be used by anyone who wants to figure out what their return on investment will be. The formula for the Compound Annual Growth Rate is used to figure out the CAGR. For instance, if you have a mutual fund that has gone up in value over time, you can use the calculator to figure out your rate of return.
What is a CAGR calculator?
It lets investors figure out how much money they will make in different situations. Several test cases can be used to measure returns in different situations.
It's easy to figure out how to use. The online CAGR calculator only needs to know the initial value, rate of interest, and the amount of time you want to invest for. It will take care of the rest.
Let's say you bought some units of an equity fund in the past and their value has gone up since then. Using the CAGR online calculator, you can figure out how much money you made on your investment.
It gives you a full picture of how much money you're making back.
You can also use the calculator to compare the performance of a stock to that of its peers or the industry as a whole.
How CAGR is calculated?
Use the CAGR calculation formula and do the following steps to figure out the compounded annual growth rate on an investment:
Mathematically, the CAGR formula is given by the following equation:
CAGR = (B / A) 1 / n – 1
In the above formula, B stands for the value of the investment in the future, A stands for the value of the investment in the present, and n stands for the number of years of investment.
You can also use the CAGR calculator to figure out the absolute return on investment. This is how to figure it out:
Absolute returns= (B- A) / A * 100