How to Calculate CAGR (Compound Annual Growth Rate)

Knowing the future value of investments is part of smart saving. You can easily determine the growth rate of your investments and feel secure in your investment choices.

Instructions

  • Step 1: Subtract one from your answer to find the compound annual growth rate of your investment. Invest wisely and see big returns in your future.
  • FACT: In 2010, Panera Bread, a specialty bakery and cafe, had one of the best investment returns. In one year, stocks went from trading at around $64 a share to over $100 a share.
  • Step 2: Type in the quotient, division answer, into a graphing calculator and raise it to the power of one over n, where n equals the years invested.
  • TIP: The formula for determining your compound annual growth rate is CAGR equals present value divided by beginning raised to the power of one over the number of years invested minus one.
  • TIP: For example, you invested $1,000 and now have $5,000. Your beginning value was $1,000 and your present value is $5,000.
  • Step 3: Divide the present value by the beginning value of your investment.
  • Step 4: Determine the beginning value and the present value of your investment.

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