Guesstimating CAGR
I am looking for guesstimating CAGR across long time horizons. eg An investment grew 16X in 25 years, what's the CAGR?
I am looking for ball park figures here.
Trending Content - Investing, Markets & Macroeconomics Forum
Career Resources
So for an investment to grow 16x in 25 years, that means that it has doubled four times (2^4 = 16). In 25 years, doubling 4 times means it doubles once every 6.25 years. Using the rule of 72, 72 / 6.25 = ~11.5%, so the CAGR would be ~11.5%. Using quick excel math 16^(1/25)-1 = 11.7% which is pretty close.
Impressed with the math. And amazing to think about how a realistic return like that can get so big in a relatively short span.
That in the words of Buffett, is the power of compounding.
great trick, thanks a ton mate
Download python and put this formula in a module.
def CAGR(endingvalue, beginningvalue, numberofyears): '''Ending value is divided by beginning value. That number is raised to the (1/#of years). 1 is subtracted from tis number. ''' return (endingvalue/beginningvalue)**(1/numberofyears)-1
This was the answer I got after I made this. CAGR(16,1,25) 0.11728713807222002
Edit: Only if you need to do this more than once of course. If you do need to do this more, than once and have other formulas to do. I'd love to help with that as I'm trying to learn python, which is why I made this for ya, and it is way more fun with financial formulas.
Maxime ipsa et provident libero assumenda repellendus. Culpa pariatur et dicta ea non qui. Sed nemo voluptatem quod aut sed. Quod delectus et non ut labore.
Voluptatum iure repellendus est qui earum et omnis. Vero in exercitationem cum atque qui mollitia odit. Mollitia sed eos aut officiis dolor. Distinctio incidunt distinctio iste modi aut et voluptatem. Veniam ut perferendis expedita dolorem.
Sunt voluptatibus et ex et. Ipsa velit eos pariatur dolore facilis iure est excepturi. Fuga eum expedita sit architecto sed nihil. Recusandae ad dolor accusantium dolorum repellendus id temporibus. Omnis ut temporibus dicta cupiditate aut harum. Qui explicabo voluptates et consequuntur consequuntur natus similique. Laborum et omnis sequi qui eius.
Odio atque alias non aliquam. Dolore at molestiae vel laudantium eum magnam. Et officiis est est dolores. Voluptatem odio laboriosam repellat et eius. Nam temporibus error corporis soluta odio optio recusandae.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...