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CAGR Excel (Compound Annual Growth Rate)

Calculate CAGR using Excel

One of Excel’s most spectacular and useful features is the tool which it provides for calculating a CAGR. A CAGR measures the rate of return for an investment – such as a mutual fund or bond – over an investment period of say 5 or 10 years. The CAGR can also be referred to as a “smoothed” rate of return as it measures the growth of an investment as if it had grown at a steady rate on an annually compounded basis.

Related Items: CAGR Video Clip, IRR in Excel, IRR Calculator, NPV in Excel

To calculate a CAGR using Excel, one should use the XIRR function.

The XIRR Function Details

XIRR returns the internal rate of return for a schedule of cash flows that is not necessarily periodic. The XIRR function is composed of the main syntax namely values, dates and guess, and these are to be discussed as follows:

XIRR Function Notes

When using the XIRR function of Excel, as a user you will need to pay careful attention, noting the following:

With these amazing features and capabilities it is no surprise that the use of Excel to calculate CAGR is so popular among not only professionals but the home user as well. With the XIRR function, Excel can handle and accurately calculate any return of investment in terms of the compound annual growth rate. With the automatic CAGR function that Excel boasts, calculating large numbers is now as best as done. All you need to do is enter your values in the appropriate cells, and the sit back and relax while Excel does the rest.

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