Numerous portals offer free calculation of CAGR using the formula:

CAGR= (FV/PV) 1/n-1

FV = Future value of the investment

PV = present value of the investment

N = time in years

After the calculation, the result would be the CAGR. You can multiply it by 100 to get the CAGR %.

Let us understand it with an example.

If you are investing ₹1 lakh to start a business, this is your PV. Now you find that your investment has become ₹ 10 lakhs (FV) after 5 (n) years.

Now, to do with CAGR calculator.

Put the respective values in the formula mentioned above.

(1000000/ 100000) 1/5-1 = O.589

Or 58.9% (when converted into the percentage)

This implies that your investment is giving you an annual return of 58.9%. CAGR provides a more realistic outlook for your return on investment.