Finance

Shop Compound Annual Growth Rate Calculator (25 Years)

Calculate compound annual growth over a period. This shop version uses a 25-year planning term as its starting point.

The CAGR result is the steady yearly growth rate that would take the starting value to the ending value over 25 years if growth were perfectly even each year, so a higher percentage means faster average growth and a lower percentage means slower average growth across the full term.

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 25 years. Using the page formula, CAGR equals $20,000 divided by $10,000, to the power of one over 25, minus one, which is 2.81% 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 25 years if growth were perfectly even every year.

For comparison, the simple average divides the 100% total gain by 25 years, which is 4.00% a year. That figure ignores compounding and overstates the steady rate, which is why CAGR, at 2.81% 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 planning a quarter-century ahead, for example a freehold shop bought young and valued again near retirement, or a lease renewal judged over a generation of trading.

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.

Why is the 25-year rate only 2.81% a year?
Because 25 years of compounding do most of the doubling, so only a small steady rate is needed. The longer the term, the lower the rate that doubles a value.

Does 2.81% a year beat shop cost inflation over 25 years?
Not necessarily. If rents and supplier prices rose faster than 2.81% a year, the shop lost ground in real terms even though its nominal value doubled.

Is a 25-year shop growth figure useful for selling decisions?
Only as background. A buyer cares about current takings, profit, lease terms, and condition, not a smoothed rate from 25 years ago.

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