CAGR Calculator: Calculate Compound Annual Growth Rate from Zero
Compound Annual Growth Rate (CAGR) is a business and investing metric used to measure the average annual growth rate of an investment, taking into account the effects of compounding. Understanding how to calculate CAGR from zero is crucial for making informed financial decisions…
- Enter the initial value of your investment.
- Enter the final value of your investment after a certain period.
- Enter the number of years over which the investment grew.
- Click ‘Calculate CAGR’ to see your result.
The formula for calculating CAGR from zero is:
(Final Value / Initial Value)^(1/n) – 1
where ‘n’ is the number of years.
| Year | Stock A CAGR | Stock B CAGR |
|---|---|---|
| 2015 | 10% | 8% |
- Always consider the time frame when comparing CAGRs.
- CAGR assumes that the investment is compounded annually.
- CAGR does not account for the timing of cash flows.
What is the difference between CAGR and IRR?
CAGR assumes that the investment is compounded annually, while IRR (Internal Rate of Return) takes into account the timing of cash flows.
For more information, see the Investopedia guide on CAGR and the SEC’s CAGR calculator.