• Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint
Share this Page URL
Help

4. Analyzing Company Fundamentals > Calculate Compound Annual Rates of Growth

Calculate Compound Annual Rates of Growth

Compound annual growth rates are the key to comparing the growth rates of different investments.

To consider the rate of growth of a value over time, you must determine its compound annual growth rate (CAGR), also known as the annualized growth rate, which gives you an idea of how the value changed over the years—not the actual year-to-year changes, but the growth rate as if the value had grown at a consistent rate each year. Whether you use a formula or a built-in Excel function to calculate CAGR, a spreadsheet makes the calculations easy.

Estimating Compounded Annual Growth Rates

Example 4-5 shows the formula for estimating CAGR when you have the values only for the beginning and ending periods in question.


PREVIEW

                                                                          

Not a subscriber?

Start A Free Trial


  
  • Creative Edge
  • Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint