Comments on: Compound Annual Growth Rate (CAGR)

By: R K Gupta

R K Gupta — Wed, 20 Feb 2008 03:56:00 +0000

Can you tell me any formula available in Excel to compute CAGR.

By: Sales Training Basics

Sales Training Basics — Tue, 05 Feb 2008 08:49:55 +0000

Sales Marketing Training Program: The Partnership for Achieving Superior Performance…

Are you an independent sales professional or small business owner? If you are you may have found some sales success, but you may also feel kind of stymied, and you aren’t sure where to turn or what to do to continue your business growth? Neither sales…

By: Henry

Henry — Sat, 19 Jan 2008 09:31:19 +0000

Sorry to impose. May I just check with you regarding the use of above mention formula CAGR.
Despite all the calculations. the result will not be meaning full unless I had something to compare with.

Normally the funds factsheet will show the offer to bid returns (%)- SGD over a period of years (1yr … 5yrs). Ironically, the manager would not tell you whether the data is derived from (CAGR). The generic term used is “annualised avg return”

Assuming the data is year-over-year growth rate, with dividend reinvested or (CAGR)

But how am I going to compare when I had invested on different time periods. Do I use XIRR, IRR to compare against CAGR. It does not make sense to me.

Can you enlighten me pls. I am confused…

By: Using the Goal Seek function in Excel: a brief tutorial | Experiments in Finance

Mon, 27 Nov 2006 18:41:24 +0000

[...] CAGR, or compound annual growth rate, is one way to measure your annualized return given an initial amount, and ending amount, and a period of time. As regular readers might recall, the formula goes like this: [...]

By: AllFinancialMatters » Blog Archive » How to Compute Compound Annual Growth Rate - CAGR

Wed, 15 Nov 2006 19:07:55 +0000

[...] Ricemutt over at Experiments in Finance has written some wonderful posts (here, here, and here) on financial math. It was through her (I think Ricemutt is a “her,” but I’m not positive on that) posts that I discovered the meaning of Compound Annual Growth Rate or CAGR as it is commonly known. Yes, I was aware of CAGR but I never really thought about it much. I didn’t know it at the time that I put my Average vs. Geometric Average post together using an Excel spreadsheet, but CAGR and Geometric Average are the same thing. And, to top it off, I found a formula for calculating them that is MUCH easier than I previously understood. That’s good for all of us! [...]

By: Ricemutt

Ricemutt — Tue, 14 Nov 2006 21:55:58 +0000

@Meigs: I’m assuming you’re referring to the equations in the CAGR excel spreadsheet above (?) If so, the “^” is the way in Excel to denote raising something to a power. So, for example, 2*2*2 = 8 = 2^3 in Excel. (It’s also a common notation for several other applications/languages).

The “$” before something (like $B$3 for example) means make that cell “constant”. It’s really only used to make things easier when I copy-and-paste equations. (In Excel, if you copy and paste an equation across several rows or columns, the variables (cells) will automatically change relative to the position of the cutting-and-pasting, and by entering the “$” symbols, you keep the cell absolute.) In reality, I don’t think it impacts what you’re trying to figure out…just look at $B$3 as the same thing as “the contents of cell B3″.

I don’t know if it will help, but I also wrote a post about XIRR a couple of weeks ago that’s also on this site (just do a search for “XIRR” on the sidebar above). XIRR is an iterative function in Excel and there should be situations where XIRR and CAGR calculate the same thing, but I can’t come up with one right now as I’m logging in remotely from a library without access to Excel to demonstrate. A friend of mine claims to have determined that XIRR is essentially finding the impled rate at which your returns equal your investments assuming compounding on a daily basis. I’m not sure if that’s true.

Hope this helps more than it confuses, but feel free to write again.

By: Meigs Hodge

Meigs Hodge — Tue, 14 Nov 2006 21:32:41 +0000

I am trying to figure out the Excel commands in the formula, as they are different from the way Excel tells you to calcuate CAGR (XIRR)

What does the accent circumflex do in the formula? It is between the two quantities in parenthesis.

And what do the dollar signs do?

By: AllThingsFinancial » Blog Archive » Day 4 - Basics of Investing

AllThingsFinancial » Blog Archive » Day 4 - Basics of Investing — Sat, 04 Feb 2006 06:03:24 +0000

[...] Compound Annual Growth Rate (CAGR) [...]