Introduction: The Compound Annual Growth Rate (CAGR) is a crucial metric for assessing the annual growth rate of an investment over a specified period. This calculator provides a simple way to calculate CAGR over a 3-year duration.
Formula: The formula for calculating CAGR is (Final Value / Initial Value)^(1 / Number of Years) - 1. This formula represents the geometric progression between the initial and final values.
How to Use:
- Enter the initial value of the investment.
- Enter the final value of the investment.
- Enter the number of years for the investment period (in this case, 3 years).
- Click the “Calculate CAGR” button to get the result.
Example: Suppose the initial value is $10,000, the final value is $13,000, and the investment period is 3 years. The calculator would output “Compound Annual Growth Rate (CAGR): 8.48%.”
FAQs:
- Q: Can I use this calculator for periods other than 3 years? A: Yes, you can enter the desired number of years to calculate CAGR for different periods.
- Q: How is CAGR different from simple annual growth rate? A: CAGR considers the compounding effect, providing a more accurate representation of annual growth over a period.
- Q: What does a negative CAGR indicate? A: A negative CAGR implies a negative growth rate or a decline in the investment value over the specified period.
- Q: Is CAGR suitable for all types of investments? A: CAGR is particularly useful for assessing the growth of investments with varying annual returns.
- Q: Can CAGR be used for non-financial metrics? A: Yes, CAGR can be applied to any metric that experiences growth over time, not just financial investments.
Conclusion: This HTML and JavaScript calculator offer a convenient way to calculate the Compound Annual Growth Rate (CAGR) over a 3-year period. Understanding CAGR is valuable for investors and businesses to assess the true annual growth rate and make informed decisions based on historical performance.