## Method 1 – Using Conventional Formula to Calculate 3-Year CAGR

**Steps**

- To calculate the
**CAGR**in Excel, select cell**C10**. - Write down the following formula.

`=(C8/C5)^(1/3)-1`

- Press
**Enter**to apply the formula.

## Method 2 – Applying the RATE Function

**Steps**

- To calculate the
**CAGR**in Excel, select cell**C10**. - Write down the following formula.

`=RATE(ROW(C8)-ROW(C5),,-C5,C8)`

- Press
**Enter**to apply the formula.

**Breakdown of the Formula**

**RATE(ROW(C8)-ROW(C5),,-C5,C8):** The **ROW** function returns the row number of the **C8 **and **C5** cells. The **RATE** function returns the interest rate per period of a loan or investment. 3 is the upper argument that represents the number of periods; the pmt argument is left blank; the C5 cell refers to the Pv argument, which indicates the Initial Value of $15250, and the C8 cell is the fv argument that points to the Final Value of $25412.

## Methods 3 – Utilizing the POWER Function to Calculate 3-Year CAGR

**Steps**

- To calculate the CAGR in Excel, select cell
**C10**. - Write down the following formula.

`=POWER(C8/C5,1/3)-1`

- Press
**Enter**to apply the formula.

**Breakdown of the Formula**

**POWER(C8/C5,1/3)-1:** The function returns the result of a number raised to a power. **C8/C5** is the number argument that refers to the Final to Initial Value ratio. **1/3** represents the power argument that indicates the raised indices.

## Method 4 – Using the RRI function

**Steps**

- To calculate the CAGR in Excel, select cell
**C10**. - Write down the following formula.

`=RRI(3,C5,C8)`

- Press
**Enter**to apply the formula.

**Breakdown of the Formula**

**RRI(3,C5,C8)**: The function returns an equivalent interest rate for the growth of an investment. 5 is the nper argument representing the number of periods, the **C5** cell is the pv argument which is the Initial Value of $15250, and the **C8** cell is the fv argument referring to the Final Value of $25412. The final output is 18.56%.

## Method 5 – Applying the GEOMEAN Function to Compute 3-Year CAGR

**Steps**

- Calculate the growth factor.
- Set the growth factor 0 on cell
**D5,**which denotes the first year of our calculation. - Select cell
**D6** - Write the following formula.

`=C6/C5`

- Press
**Enter**to apply the formula.

- Drag the
**Fill Handle**icon down the column.

- Calculate the CAGR.
- Select cell
**C10**. - Write down the following formula.

`=GEOMEAN(D6:D8)-1`

- Press
**Enter**to apply the formula.

**Breakdown of the Formula**

**GEOMEAN(D6:D8)-1: **The function returns the geometric mean of an array or range of positive numbers. **D6:D8** is the number 1 argument for the series of Growth Factors. Here, the output is 18.56%.

## Method 6 – Utilizing IRR Function

**Steps**

- Insert zeros in the cells containing the intermediate Revenue values.

- Select cell
**C11**. - Write down the following formula.

`=IRR(C5:C8)`

- Press
**Enter**to apply the formula.

**Breakdown of the Formula**

**IRR(C5:C8):** The function returns the internal rate of return for a series of cash flows. **C5:C8** is the values argument referring to the Revenues series. The output is 20.95%.

## Method 7 – Applying XIRR Function to Calculate 3-Year CAGR

**Steps**

- Put the initial and final sales amount and dates in a different place.

- Select cell
**C14**. - Write down the following formula.

`=XIRR(C11:C12,D11:D12)`

- Press
**Enter**to apply the formula.

**Breakdown of the Formula**

**XIRR(C11:C12,D11:D12): **The function returns the internal rate of return for a schedule of cash flows. **C11:C12** is the values argument that refers to the Initial and Final Values for the sales amount. **D11:D12** represents the dates argument indicating the Initial and Final Values for the Dates.

## Things to Remember

- To change the CAGR value to a percentage, press CTRL+SHIFT+”%” keys on your keyboard. Alternatively, you can open the Format Cells dialog box by pressing CTRL+1 and changing the cell formatting to a percentage.
- Excel’s compound annual growth rate formula can determine how much the investment should return annually at a constant growth rate.
- The
**#VALUE!**error is most likely present if you encounter any Excel CAGR formula errors.

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