Finance

Shop Compound Annual Growth Rate Calculator (15 Years)

Calculate compound annual growth over a period. This shop version uses a 15-year planning term as its starting point.

In real terms, the CAGR result is the steady yearly growth rate that would take the starting value to the ending value over 15 years, smoothing out any uneven growth along the way; it describes the average pace of growth, not the growth in any single year.

Formula

CAGR equals ending value divided by starting value, to the power of one over years, minus one.

How it works

CAGR smooths growth into a single yearly rate, even if actual yearly growth varied.

Worked example

Starting value $10,000, ending value $20,000, term 15 years. Using the page formula, CAGR equals $20,000 divided by $10,000, to the power of one over 15, minus one, which is 4.73% a year. That is the calculator's own result for these defaults, and it is the steady yearly rate that would grow $10,000 to $20,000 over 15 years if growth were perfectly even every year.

For comparison, the simple average divides the 100% total gain by 15 years, which is 6.67% a year. That figure ignores compounding and overstates the steady rate, which is why CAGR, at 4.73% a year, is lower. All figures are estimates for planning only, not financial advice, as the pages' existing disclaimer already states.

Who this term suits for a shop owner: a shop owner weighing a 15-year premises plan, such as buying the freehold, signing a long lease, or paying off a fit-out loan over the life of the shop.

FAQs

What does CAGR mean?
CAGR is the steady yearly growth rate that would take a starting value to an ending value.

Is this shop calculator exact?
No, it is an estimate for planning only, based on the numbers you enter.

Are these figures financial advice?
No, they are estimates for planning only, not financial advice. Check with a qualified adviser for decisions involving large sums.

What does 4.73% a year mean for a shop over 15 years?
It is the steady yearly rate that doubles $10,000 to $20,000 in 15 years. A shop growing at this rate looks slow year by year, yet still doubles over the term.

Why is the CAGR lower than the simple average of 6.67% a year?
The simple average ignores compounding. CAGR is always lower than the simple average for the same total gain, because compounding adds growth on earlier growth.

Should a 15-year shop plan use one fixed growth rate?
No. Rents, supplier prices, and high-street footfall change over 15 years, so treat 4.73% as a smoothed summary, not a forecast.

Estimates only, not financial advice. Figures are approximate and do not include all fees, taxes, or changing rates unless stated.