CAGR Future Value Calculator

What is CAGR

CAGR stands for Compound Annual Growth Rate.

It is a measure of the annually compounded increase in the value of an investment. An alternative way to explain what CAGR is would be, that it is the opposite concept of a compound interest rate, where we get the values of an investment at the beginning and at the end of the investment period, out of which we are trying to calculate the annual interest rate.

CAGR is a very useful tool for comparing volatile investments against other investment tools and opportunities on the market, often used by investors or statistics offices.

The CAGR Formula

The formula for calculating the CAGR of investment requires the following data:

• The starting value (SV).
• The ending value (EV).
• The duration of the investment in years (Y).

The formula, into which we plug our values, is as follows.

CAGR=\left((\tfrac{EV}{SV})^{\frac{1}{Y}}-1\right)*100

This formula is the original CAGR formula, designed to find the CAGR interest rate.

In order to find the future value of EV, we can rearrange the formula, so it resembles the form of a compound interest rate formula, as seen below.

EV=SV*(1+\tfrac{CAGR}{100})^Y

This formula allows us to input the CAGR percentage, and the starting value of our investment to find the end value of our investment, after a given number of years.

Worked Out Example

Before we move to the worked example, it is important to note, that CAGR usually works in terms of whole years. However, if needed, we can apply it to partial years, as long as we convert the months and days into decimals. 

For example, 1 year 2 months, and 4 days could be converted to 1 year and 64 days, or simply 1 64/365 of a year, since a year has 365 days and a month has 30 on average. This would yield a decimal value of 1.175 years, rounded to 3 decimal places.

If this seems complicated, use our calculator instead.

In our example, we will calculate the value of our investment after 4 years, if we invested $5,000 at an 8% CAGR interest.

We have the following values to substitute into the formula.

• SV = 5,000
• Y = 4
• CAGR = 8

The given values are substituted into the formula, yielding the following.

EV=5,000*(1+\tfrac{8}{100})^4

This simplifies as follows (keep in mind, that everything is rounded to 4 decimal places).

EV=5,000*1.08^4 \\=5,000*1.3605=\$6,802.44

The interpretation of this result is, that if we invest $5,000 for 4 years at an 8% CAGR, our investment should have a value of 6,802.44 after the 4 years have passed.

Using The CAGR Future Value Calculator

In order to calculate the CAGR value for your investment, follow these steps.