Finance

Shop Compound Annual Growth Rate Calculator (5 Years)

Calculate compound annual growth over a period. This shop version uses a 5-year planning term as its starting point.

The CAGR result is the steady yearly rate that would grow the starting value to the ending value over 5 years, so it summarises short-term growth as one even yearly pace instead of showing each separate 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 5 years. Using the page formula, CAGR equals $20,000 divided by $10,000, to the power of one over 5, minus one, which is 14.87% 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 5 years if growth were perfectly even every year.

For comparison, the simple average divides the 100% total gain by 5 years, which is 20.00% a year. That figure ignores compounding and overstates the steady rate, which is why CAGR, at 14.87% 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 refit or small expansion that is valued again within about 5 years, for example new shelving, a till upgrade, or a shopfront refresh, where the value must double quickly for the yearly rate to look this high.

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.

Is 14.87% a year realistic for a shop over only 5 years?
It is the steady rate that doubles $10,000 to $20,000 in 5 years, but real shop growth is rarely even: one strong year and four flat years give the same CAGR as five even years.

Why is the CAGR lower than 20% a year here?
The simple average divides the 100% total gain by 5, which ignores compounding. CAGR finds the smaller steady rate that, compounded each year, still doubles the value.

What should a shop owner check before trusting a 5-year growth figure?
Whether the ending value counts new stock, unpaid supplier bills, or a one-off sale, and whether takings, not just valuation, actually grew.

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