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Calculating CAGR in Excel: Method 1: Direct Calculation

This document provides instructions for calculating compound annual growth rate (CAGR) in Microsoft Excel using three different methods: 1. Direct calculation method that uses the formula (Ending Value/Beginning Value)^(1/Number of Years) - 1. 2. Power function method that uses the POWER formula. 3. Rate function method that uses the RATE formula. The document demonstrates each method using India's GDP growth rates from 2003 to 2012 and shows that all three methods produce a CAGR of 7.6% for that period.

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Rodrigo Garcia
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© © All Rights Reserved
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Download as XLSX, PDF, TXT or read online on Scribd
28 views

Calculating CAGR in Excel: Method 1: Direct Calculation

This document provides instructions for calculating compound annual growth rate (CAGR) in Microsoft Excel using three different methods: 1. Direct calculation method that uses the formula (Ending Value/Beginning Value)^(1/Number of Years) - 1. 2. Power function method that uses the POWER formula. 3. Rate function method that uses the RATE formula. The document demonstrates each method using India's GDP growth rates from 2003 to 2012 and shows that all three methods produce a CAGR of 7.6% for that period.

Uploaded by

Rodrigo Garcia
Copyright
© © All Rights Reserved
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Calculating CAGR in Excel

Tutorial URL:
Country
India

http://techtites.com/2014/01/21/calculate-cagr-microsoft-excel/
Subject Descriptor

Units
National
Gross domestic product, constant prices
currency
% growth

Scale
Billions

Source: International Monetary Fund, World Economic Outlook Database, October 2013

Method 1: Direct calculation


Syntax

(Ending value / Beginning value)^(1/n) - 1


where: n = number of years

Option 1:
Option 2:

=(O$5/F$5)^(1/9)-1
=(O$5/F$5)^(1/($O$4-$F$4))-1

7.60%
7.60%

Method 2: Using POWER function in Excel


Syntax

POWER(number, power)

Where:

Number: The base number. It can be any real number.


Power: The exponent to which the base number is raised.

Option 1:
Option 2:

=POWER(O$5/F$5,1/9)-1
=POWER(O$5/F$5,1/($O$4-$F$4))-1

7.60%
7.60%

Method 3: Using RATE function in Excel


Syntax

RATE(nper, pmt, pv, [fv], [type], [guess])

Where:

Nper: The total number of payment periods in an annuity.


Pmt: The payment made each period and cannot change over the life of the annu
Pv: The present value the total amount that a series of future payments is wor
Fv: The future value, or a cash balance you want to attain after the last payment

Option 1:
Option 2:

=RATE(9,,-F$5,O$5)
=RATE($O$4-$F$4,,-F$5,O$5)

7.60%
7.60%

oft-excel/
2003
30,058

2004

2005

2006

2007

2008

2009

2010

2011

32,422

35,432

38,715

42,509

44,164

47,908

52,961

56,314

7.9%

9.3%

9.3%

9.8%

3.9%

8.5%

10.5%

6.3%

ase, October 2013

Note: This method requires you to know the number of years


Note: This method adds a degree of flexibility because you don't need to calculate the number of y

Note: This method requires you to know the number of years


Note: This method adds a degree of flexibility because you don't need to calculate the number of y

nge over the life of the annuity. Typically, pmt includes principal and interest but no other fees or taxes. If pm
s of future payments is worth now.
ttain after the last payment is made. If fv is omitted, it is assumed to be 0 (the future value of a loan, for exa

Note: This method requires you to know the number of years


Note: This method adds a degree of flexibility because you don't need to calculate the number of y

2012
58,137
3.2%

alculate the number of years

alculate the number of years

other fees or taxes. If pmt is omitted, you must include the fv argument.
value of a loan, for example, is 0).

alculate the number of years

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