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Using Excel to calculate the Compound Annual Growth Rate (CAGR) for an investment.

Anonymous
2012-01-16T03:04:31+00:00

I am using Office 2011 for Mac on a MacBook Pro.  I previously used Lotus 123 on a Windows XP machine and calculating the CAGR for an investment was very simple using the @RATE formula to simply input:

  1.  Future Value.
  2.  Present Value.
  3.  and Term.

I thought using the Excel INTRATE Financial Formula  to calculate the the CAGR would work fine because the formula asks you to input similar information which I did as follows:

  1.  Settlement (purchase) Date 9/16/1979
  2.  Maturity Date. 12/31/2011
  3.  $ Amount Invested. $27,431
  4.  Redemption $ Amount received at maturity. $211,680
  5.  Basis (annual day count, ie 360 days or 365 days.). 365 day basis

When I used the INTRATE Financial Formula to calculate the CAGR on a 32.3 year investment, the answer returned was 20.79%  when the correct answer should of been 6.53%.  The higher interest rate was returned by Excel, and the lower correct interest rate was returned by both Lotus 123 and a 15 year old HP12C calculatopr.

Where in Excel can I find the Financial Formula to accurately calculate the CAGR?  It has to be there somewhere because calculating CAGR is a very common financial calculation.

Thank you,   Simon Carey         ******@comcast.net

Microsoft 365 and Office | Excel | For home | MacOS

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  1. Anonymous
    2012-01-16T06:50:00+00:00

    One way:

    A1:      9/16/1979

    A2:     12/31/2011

    A3:     27431

    A4:     211680

    A5:     =RATE((A2-A1)/365,0,A3,-A4)   ====> 6.53%

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  1. Anonymous
    2012-01-16T16:59:25+00:00

    Perfecto, your reply was perfect.  Thanks.....Simon

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