In this article, we’ll discuss how to calculate the **future value **of an **investment **in Excel when the **CAGR **is **known**. This is also known as the **Reverse Compound Annual Growth Rate **calculation.

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**2 Methods to Calculate Future Value ****(Reverse Compound Annual Growth Rate) When CAGR Is Known in Excel**

**Definition of CAGR (Compound Annual Growth Rate): **A **compound annual growth rate **(**CAGR****) **calculates the **rate of return **for **an investment **over a certain **period **of **investment time**. It estimates the growth if the investment has a nature of growing steadily on a **yearly compounded basis**. That’s why we also call it the “**smoothed**” rate of return.

On the other hand, we can **calculate **the **future value** i.e., the **final value of an investment **when the **CAGR **is **known **for a certain** investment period.** We also call this amount the **Reverse Compound Annual Growth Rate.**

Here, we’re going to discuss** two different methods** to calculate the Reverse Compound Annual Growth Rate. Let’s dive into the examples.

**1. ****Calculate Future Value When CAGR Is Known in Excel Using Basic Formula**

Using the following formula, we can easily calculate the **Future Value **for a certain investment period when the **CAGR **value is known.**FV = PV * (CAGR + 1) ^{n}**In this

**formula**,

**FV**– the future value which is the final amount of an investment after the investment period ends.

**PV**– the starting or present value of the investment money.

**CAGR**– known Compound Annual Growth Rate in percentage.

**n**– the number of years for which we’ll invest the money.

Let’s say we want to know the **future value **of an **initial investment** of $**10,000** for an investment period of **10** years. The compound annual growth rate **(CAGR)** in this investment is **10%. **In this illustration,**C4** – initial investment/present value **(PV)**

**C5**– compound annual growth rate

**(CAGR)**

**C6**– no of investment periods in years

**(n)**

In cell

**C8,**put the following formula:

**=C4*(C5+1)^C6**

Applying the formula, we’ve got the **future value**, which is $**25,937.**

**Read More:** **CAGR Formula in Excel: With Calculator and 7 Examples**

**2. ****Use of the FV Function to Estimate Future Value When CAGR Is Known**

The **FV function** calculates the **future value **(final investment goal) of a **current investment **amount for a certain number of payment periods based on a fixed interest rate (**growth rate)**. In this method, we’ll discuss an example to **calculate **the **future value **using the **FV function**.

Let’s first **introduce **the** FV function** first-

The syntax for the **FV function** is-**FV(rate, nper, pmt, [pv], [type])**The function takes

**several arguments**, like-

**rate (required)-**the annual growth rate of the investment,

**CAGR**.

**nper (required)**– number of payment periods in

**years**.

**pmt (required)**– payment amount per period which is

**blank**in this calculation.

**pv (optional)**– present value or

**initial investment**amount.

**type (optional)**–

**0**for payment due at the

**end of the payment**period and

**1**for payment due at the

**start of the period.**

In this example, we’ll use the **same data **from **example 1** to calculate the **future value**. In cell C10, we configured the following formula-**=FV(C5,C6,,C4,0)**

**Where,**

**C4**– initial investment/present value

**(PV)**

**C5**– compound annual growth rate

**(CAGR)**

**C6**– no of investment periods in years

**(n).**

**C7 –**payment per period which is

**empty**in this calculation.

**C8**– payment is due at the end of the period i.e.,

**0**.

The following **screenshot **shows the **output** which is the **same **as the **value **we’ve got from the** first example.**

**Read More:** **How to Use Compound Interest Formula in Excel**

**Note**

- While calculating the
**future value**using the**FV function,**we used a**negative sign before**the present value (**pv**) argument. It is to return the**future value**(**fv)**as a**positive**If we use the**pv argument without**the**negative sign**, it’ll**calculate**the**future value**as**negative**.

**By default**, the result shows as a**number**with**decimal places.**We can**remove decimal places**following the steps below:

- Go to the
**Home Tab.** - Navigate to the
**Number panel.** - choose the
**Decrease Decimal**

**Conclusion**

Now, we know how to find the future value for the known value of CAGR in Excel. Hopefully, it would encourage you to use this functionality more confidently. Any questions or suggestions don’t forget to put them in the comment box below.

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