CAGR is an acronym for Compounded Annual Growth Rate commonly used in determining how well a business is performing in the fiercely competitive market. It represents the growth of an organisation, and you can easily make out the growth rate, or the lack of it, using a CAGR calculator.
Such a calculator is easily available online, but not all of them are reliable. Groww’s CAGR calculator online brings you an organised and accurate approach to calculate your business’ CAGR.
In this article
How can a CAGR calculator help you?
If you own a business, the CAGR can indicate a lot of factors which are otherwise overlooked. Unlike the concept of ‘absolute returns’, growth based on CAGR takes into account the element of time. It is thus a better indicator of growth over a period.
Note that the CAGR is an indicative figure and not a real one. In its most basic sense, it indicates the exact rate of an investment’s growth considering that it grows at the same rate and the returns are reinvested. Taking note of CAGR is also a huge bonus when you are considering differential investment options.
A CAGR calculator helps you determine the true returns on investment yearly. In this sense, using our CAGR calculator online saves you time and other resources as it is completely free.
Thus, the CAGR calculator can tell you if:
- Your business is growing with time and whether the profits thus generated is being invested correctly.
- It will enable you to evaluate your investment options. For example, if stock A is not working as well as Stock B based on their respective CAGR indices, you can invest in Stock B instead.
- The relative growth of your organization with respect to the market leaders in your business segment.
Note that no CAGR calculator in India will give you any data on investment risk.
The formula to calculate CAGR
CAGR = (FV / PV) 1 / n – 1
It is a mathematical calculation that determines the real-time CAGR for any organization. The values stand for the following:
|N||Time period in years|
An example of CAGR calculation
If you have an initial investment of Rs. 1 Lakh in a business, it constitutes the PV. If the total investment has swollen to Rs 10 Lakh (FV) after 5 years (N), the CAGR is:
(10,00,000/1,00,000)1 / 5 – 1 or 0.589
Thus, the CAGR percentage is CAGR x 100 or 58.9%.
How to use Groww’s CAGR calculator?
You can use Groww’s CAGR calculator online without any charges. Follow these simple steps.
- Enter your initial investment amount.
- Enter the expected value of the investment after a certain period of time.
- Enter the number of years or months for which you wish to use the CAGR calculator.
The CAGR calculator will generate the results within seconds as soon as you input the values.
Advantages of Groww’s online CAGR calculator
Our services provide you with several significant benefits.
- It provides a detailed outlook of your ROI.
- If you are a potential investor, you can also use our service of a mutual fund CAGR calculator. It will help you determine how much you need to invest to maximize returns over a certain period.
- Compare your business’ returns with benchmark options and evaluate the performance.
- Make long-term capital influx plans.
- Avail a globally recognized financial platform and get accurate results.
You can see a wide range of other calculators below. Feel free to use them. Our CAGR calculator is designed for safety, efficiency, and accuracy. It helps you plan your future finances efficiently.
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Frequently Asked Questions (FAQ)
- Is the CAGR calculator free for use?
Yes, Groww’s online CAGR calculator is free for use. There is no restriction on how many instances you use it.
- Do I need to log in?
No, you do not need to log in. Anyone can use our calculator.
- Do you provide data safety measures?
Yes, our servers are secure and store your data using class-leading technologies.
- Does CAGR reflect investment risks?
No, the CAGR is not an indicator of investment risk.
- Is calculating CAGR a better idea than working on IRR?
The CAGR is a better performance indicator than the IRR or Internal Rate of Return. It is indicative of overall financial health and stability.