CAGR Calculator Formula

Understand the math behind the cagr calculator. Each variable explained with a worked example.

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Formulas Used

CAGR

cagr = (pow(ending_value / beginning_value, 1 / years) - 1) * 100

Total Return

total_return = (ending_value - beginning_value) / beginning_value * 100

Absolute Gain

absolute_gain = ending_value - beginning_value

Variables

VariableDescriptionDefault
beginning_valueBeginning Value(USD)10000
ending_valueEnding Value(USD)25000
yearsNumber of Years(years)5

How It Works

CAGR Formula

CAGR = (Ending Value / Beginning Value)^(1/n) - 1

CAGR smooths out the return over the period, giving you the consistent annual rate that would produce the same final result.

Worked Example

$10,000 invested grows to $25,000 in 5 years.

beginning_value = 10000ending_value = 25000years = 5
  1. 01CAGR = (25000/10000)^(1/5) - 1
  2. 02= 2.5^0.2 - 1
  3. 03= 1.2011 - 1 = 0.2011
  4. 04CAGR = 20.11%
  5. 05Total return = 150%

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