Enhanced Reverse CAGR Calculator
Calculate any variable in the CAGR formula with this advanced tool. Solve for final value, initial value, time period, or CAGR rate with detailed explanations.
Understanding CAGR
Compound Annual Growth Rate (CAGR) is a measure of growth over multiple time periods, expressed as a single annualized percentage. It represents the rate at which an investment would have grown if it had grown at a steady rate.
The Basic CAGR Formula:
CAGR = (Final Value / Initial Value)^(1/Time Period) - 1
Where Time Period is measured in years
Key Variables in CAGR Calculations:
Initial Value
The starting point of your investment or metric. This is the value at the beginning of the time period being measured.
Final Value
The ending point of your investment or metric. This is the value at the end of the time period being measured.
Time Period
The duration over which growth is measured, typically in years. Fractional years can be used for more precise calculations.
CAGR
The year-over-year growth rate applied to the initial value that would result in the final value over the specified time period.
Derived CAGR Formulas:
To Calculate Final Value:
Final Value = Initial Value × (1 + CAGR)^Time Period
To Calculate Initial Value:
Initial Value = Final Value ÷ (1 + CAGR)^Time Period
To Calculate Time Period:
Time Period = log(Final Value ÷ Initial Value) ÷ log(1 + CAGR)
To Calculate CAGR:
CAGR = (Final Value ÷ Initial Value)^(1 ÷ Time Period) - 1
Practical Examples
Retirement Planning
You have $50,000 today and want $200,000 for retirement in 15 years. What CAGR do you need?
- Initial Value: $50,000
- Final Value: $200,000
- Time Period: 15 years
Required CAGR: 9.61%
Revenue Growth Planning
Your company has $1M in revenue and wants to reach $5M in 7 years. What CAGR is needed?
- Initial Value: $1,000,000
- Final Value: $5,000,000
- Time Period: 7 years
Required CAGR: 25.89%
College Fund
You need $150,000 for college in 10 years. If you can achieve 6% CAGR, how much should you invest today?
- Final Value: $150,000
- CAGR: 6%
- Time Period: 10 years
Initial Value Needed: $83,729.42
Property Investment
If you bought a house for $300,000 and it's now worth $425,000 after 8 years, what was the CAGR?
- Initial Value: $300,000
- Final Value: $425,000
- Time Period: 8 years
Achieved CAGR: 4.44%
When to Use CAGR
Best Uses for CAGR
- Comparing investments with different holding periods
- Measuring consistent growth over multiple years
- Setting long-term financial goals
- Evaluating historical performance of investments
- Benchmarking against market averages
Limitations of CAGR
- Doesn't show volatility or year-to-year variations
- Can mask significant interim fluctuations
- Assumes steady growth (which rarely happens in reality)
- Doesn't account for additional contributions or withdrawals
- Past CAGR is not a guarantee of future results