is there a function to work out Compound annual growth rate?

bartoni

Active Member
Joined
Jun 10, 2003
Messages
296
Hi,

is there a function to work out Compound annual growth rate?

Thanks
 

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Hi Bartoni,

I believe the formula is i = (P/P0)^(1/n) - 1

where n is the number of years over which the growth as occurred, P is the ending principle, P0 is the beginning principle.

Just as an example if P0 = $1000, P = $1500, n = 5 years, the effective annual interest rate would be 8.4%.

Note that n can include partial years.

Keep Excelling.

Damon
 
Upvote 0
You can use the RATE function like this:
CAGR.XLS
ABCD
1
2CAGR
3
4Rate5.0%
519911,234
619921,296=C5*(1+C$4)
719931,360=C6*(1+C$4)
819941,429=C7*(1+C$4)
919951,500=C8*(1+C$4)
10Years4=B9-B5
11CAGR5.0%=(C9/C5)^(1/C10)-1
12CAGR5.0%=RATE(C10,,-C5,C9)
Sheet1


The formula in C11 (like Damon's) is:

=(C9/C5)^(1/C10)-1

The formula in C12 is:

=RATE(C10,,-C5,C9)
 
Upvote 0
bartoni.

didn't know about the rate function, but since i wrote this, you might as well have it :)

ben.
Code:
Function CAGR(InitialValue As Range, EndValue As Range, Years As Tange, Optional TrailingZeroes As Integer = -999)

If TrailingZeroes = -999 Then TrailingZeroes = 1

If TrailingZeroes > 13 Then
    MsgBox "Accuracy is limited to 13 digits"
    TrailingZeroes = 13
End If

CAGR = FormatPercent((EndValue / InitialValue) ^ (1 / Years) - 1, TrailingZeroes)

End Function
book1
ABCD
1InitialValueEndValueYearsCAGR
21000020000515%
31000020000514.9%
41000020000514.87%
51000020000514.870%
Sheet1
 
Upvote 0

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