Complete Guide to CAGR Calculation
Understand the formula for CAGR and its significance in evaluating long-term investment performance.
What is CAGR?
Basic Definition
Compound Annual Growth Rate (CAGR) is a measure of an investment's annual growth rate over a specified time period, assuming profits are reinvested at the end of each period. The formula for CAGR is:
\[ \text{CAGR} = \left( \frac{\text{Ending Value}}{\text{Beginning Value}} \right)^{\frac{1}{\text{Number of Periods}}} - 1 \]
- Provides a smoothed annual growth rate
- Facilitates investment performance comparison
- Helps in simplifying decision-making processes
- Important for long-term investment analysis
Key Advantages
Eliminates the impact of annual volatility for clearer comparisons
Helps investors to understand the true growth rate over time
Useful for evaluating different investment opportunities
Function Syntax
XLOOKUP(lookup_value, lookup_array, return_array, [if_not_found], [match_mode], [search_mode])
lookup_value
The value to search for
lookup_array
The range to search within
return_array
The range containing the return values
if_not_found (Optional)
Value to return if no match is found
match_mode (Optional)
0: Exact match; -1: Exact or next smaller; 1: Exact or next larger
search_mode (Optional)
1: First-to-last; -1: Last-to-first; 2: Binary search
Usage Examples
Basic Example
Looking up contact phone number for a specified customer ID in customer data table
=XLOOKUP(A2, B2:B10, C2:C10)
Advanced Example
Cross-sheet lookup with multiple matching results
=XLOOKUP(A2, Sheet2!B:B, Sheet2!C:E, "Not Found", 0)
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Try NowTroubleshooting
#N/A Error
Common error when no match is found, can be handled by setting the if_not_found parameter
Data Type Mismatch
Ensure lookup value and range data types match
Performance Optimization
Use binary search mode to improve efficiency with large datasets
Function Comparison
| Feature | XLOOKUP | VLOOKUP | INDEX+MATCH |
|---|---|---|---|
| Lookup Direction | Bi-directional | Right only | Bi-directional |
| Multiple Column Return | Supported | Not supported | Supported |
| Error Handling | Built-in | Additional handling needed | Additional handling needed |
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