You can use the RRI function in Excel to calculate the compound annual growth rate (CAGR) of an investment over a multi-year period.
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Compound Annual Growth Rate in Excel
1. The RRI function below calculates the CAGR of an investment. The answer is 8%.
Note: the RRI function has three parameters (number of years = 5, start = 100, end = 147).
2. CAGR measures the growth of an investment as if it were growing at a steady rate on an annual compounding basis.
The same, similar:
Note: again, number of years or n=5, start=100, end=147, CAGR=8%.
3. Knowing this, we can easily create a CAGR formula that calculates the compound annual growth rate of an investment in Excel.
A2 = A1 * (1 + CAGR)n
end = start * (1 + CAGR)n
end/start = (1 + CAGR)n
(end/start)1/n = (1 + CAGR)
CAGR = (end/start)1/n – first
4. CAGR formula is formed.
In addition, you can also view many other excel articles here.
