How to Use Excel to Calculate CAGR

How can I use Excel to compute CAGR?

Understanding your Compound Annual Growth Rate is very helpful if you are a financial assistant, investment manager, or business owner. It gives you a succinct picture of how your company has expanded, which creates even more opportunities. Examine your revenue from several years, identify your successes, and repeat the process.

The main topic of this post is using Excel CAGR calculation. Although there is not a dedicated function for doing this, you can tackle the computation in a few different ways and obtain precise outcomes. Now let us get going!

Compound Annual Growth Rate: What Is It?

What is the method for figuring out compound annual growth rate, I wonder?

An overview of calculating CAGR manually and with Microsoft Excel is provided below.

Excel CAGR calculation: What Is It?

To put it simply, the return on investment over a certain period of time is calculated utilizing the Compound Annual Growth Rate (CAGR).

Financial specialists utilize this phrase, which is not related to accounting, to study different scenarios and come to more thoughtful, better conclusions.

Let us demonstrate Excel CAGR calculation with an example. We will examine a stock’s year-end prices in this case. Every day, its value fluctuates, frequently at an irregular pace. With the use of Excel CAGR calculation, we can determine the single rate that best captures the return throughout the whole measurement period:

• 2018 stock price: $140
• 2019 stock price: $155
• 2020 stock price: $170

You can observe that the growth rate varies from year to year. On the other hand, we can determine a single growth rate for the entire time period using the CAGR formula.

How to use Excel CAGR calculation [Excel CAGR formula]?

As of this writing, there is not a specific method in Excel for figuring out your Compound Annual Growth Rate (CAGR). Fortunately, there are a few different formulas that you can apply in this situation. Below are two guides that we have put together, each addressing the math from a different aspect.

How is the compound annual growth rate determined?

The latest iteration of Microsoft Excel 2019 designed for Windows 10 was used to create the guides below. Some steps can be changed if you are on a different platform or version. Speak with our professionals if you require any additional help.

Procedure 1. Manually calculate the Excel CAGR calculation or use the Excel CAGR algorithm.

If you know the general formula for compound annual growth rate, you can quickly make a calculator. In your worksheet, you must enter the following three values:

1. Open Microsoft Excel and select the desired document to work with, or start from scratch. Before following the guide, make sure your worksheet(s) include data.
2. Enter your formula after choosing an output cell to represent your final Excel CAGR calculation figure. The following is the basic formula for figuring out your Excel CAGR calculation:

• Initial value of the investment, or BV
• EV stands for the investment’s end value.
• n: The quantity of periods

3. This is how your formula should appear: =(EV/BV)^(1/n)-1. The formula in our case would be =(B2/B1)^(1/B3)-1.

Example of the Excel CAGR calculation formula

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4. Completed! This formula can be applied again and again to determine your Compound Annual Growth Rate.

Procedure 2. Apply the RRI calculation.

Currently, Excel offers a another method of computing your Excel CAGR calculation using the RRI calculation. The start value, end value, and number of periods are its other three main parameters. Here is another example of how to use this function that we have set up.

1. Open Microsoft Excel and select the desired document to work with, or start from scratch. Before following the guide, make sure your worksheet(s) include data.
2. Enter your RRI formula after choosing an output cell to represent your final Excel CAGR calculation value:

• nper: The total amount of time in periods.
• PV is the investment’s present value.
• fv: The investment’s future value.

3. This is how your formula should appear: =RRI(nper,pv,fv). The formula in our case would be =RRI(B3,B1,B2).

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4. Completed!

Technique 3. Utilize the template for the Excel CAGR calculation.

Excel download template for Excel CAGR calculation formula:

You will not have to stress about computing your Excel CAGR calculation going forward, thanks to this automated calculator. Utilizing Vertex42’s Online Excel CAGR calculation along with its Excel template, you can effortlessly calculate this figure without the need for manual formula input.

Final thoughts

We hope that this post has been useful in showing you how to use Excel CAGR calculation. Now that you have access to meaningful information on your progress, you will be more equipped to make decisions based on the information. We wish you many blessings on your trip! Do not hesitate to get in touch with us if you need any more help.