# How to Calculate CAGR

For any person who has invested money, it is essential that he evaluates his investment performance. Hence, it is important to calculate the total return or Compound Annual Growth Rate (CAGR). The method of calculation and the associated concept has been discussed here.

Scholasticus K

Last Updated: Mar 8, 2019

Calculation Formula

It takes into consideration three important values or dimensions of a specified investment: the ending value, the beginning value, and its time period. The end result of this formula is a rate (expressed in percentage) that gives us the ROI received per year.

The formula will give you a percentage rate that is applicable for every year, in an annualized manner. Plug in the three values and compute your investment's growth rate.

Applications

This rate concept is applicable in several circumstances where the 3 requisite numbers i.e. the ending value, beginning value, and number of years are available. Though, in theory, the formula is applicable to fixed return investments, you can use the same to analyze, summarize, and forecast the return value on an annual basis.