How Do You Calculate CAGR in Excel? A Simple Guide for Non-Finance Folks

In this post, I am sharing one of my participants' questions for your information. The question is: how do I calculate CAGR (Compounded Annual Growth Rate) in Excel? CAGR is a concept that applies to everyone who wants to determine the growth rate of any numbers, from residential flat prices to project metrics. As I am not a finance expert, I researched the concepts online and created different scenarios to explain this process.

Hope this information is helpful to you. Wishing you a great week ahead and a happy Christmas!

Regards,
Hariharan Ramakrishnan
Microsoft Office Trainer/Consultant
Location: Chennai, India
Tags: Excel tips, City-India-Chennai, Country-India

To calculate CAGR (Compound Annual Growth Rate) in Excel, follow these steps:

Step-by-Step Guide:
- Step 1: Determine the initial value (starting value) and the final value (ending value) of the investment or metric you want to calculate the CAGR for.
- Step 2: Calculate the number of years between the initial and final values.
- Step 3: Use the formula for CAGR in Excel, which is: =((Final Value/Initial Value)^(1/Number of Years))-1.
- Step 4: Input the formula in a cell in your Excel spreadsheet.
- Step 5: Press Enter to calculate the CAGR. The result will be the annual growth rate percentage.

Example:
Assume you invested $1,000 in a project that grew to $2,000 over 5 years. To calculate the CAGR:
- Initial Value = $1,000
- Final Value = $2,000
- Number of Years = 5
- CAGR Formula: =((2000/1000)^(1/5))-1
- CAGR = 14.87% per annum

By following these steps and using the formula in Excel, you can accurately calculate the Compound Annual Growth Rate for any investment or metric.