Summarize the following:
In order to calculate the CAGR, first you need to define the period of time for which you want to do the calculation. Next, you need to know the beginning value of an investment. Then, find out the ending value of the investment for the time period. Divide the ending value by the beginning value. Then raise the result to the power of 1 divided by the number of years in the time period. Finally, subtract 1 from the result. Raising a value to an exponent is done on a calculator by entering the first value, pressing the exponent button (usually represented as xy{\displaystyle x^{y}}), then entering the exponent value and pressing enter. Alternately, you can type the expression into Google using the "^" symbol between the base number and exponent. The search engine will solve it for you. In the example above, the period was three years, from 2012 to 2015. The beginning value was $10,000. The ending value was $19,500. Use the following formula: CAGR=((endingvalue/beginningvalue)1numberofyears)1{\displaystyle CAGR=((endingvalue/beginningvalue)^{
rac {1}{numberofyears}})-1} Using the above formula, CAGR=(($19,500/$10,000)13)1{\displaystyle CAGR=((\$19,500/\$10,000)^{
rac {1}{3}})-1} This equals (1.950.333)1{\displaystyle (1.95^{0.333})-1} This then equals 1.24931{\displaystyle 1.2493-1} Which solves to 0.2493, or 24.93 percent.
Gather the information. Calculate CAGR with a mathematical formula. Learn with an example.