Annual Average Rate Calculator

Annual Average Rate Calculator calculator can be used to calculate the average annual growth rate over a specified period based on initial and final values.

Input Parameters

Calculation Results

Calculation Formula

Annual Average Rate = [(Final Value / Initial Value)^(1/Number of Years) - 1] * 100%

Where:
Initial Value: The starting value of the investment or amount
Final Value: The ending value of the investment or amount
Number of Years: The time period over which the growth occurred

Annual Average Rate Calculator Calculator Usage Guide

Learn how to use the Annual Average Rate Calculator calculator and its working principles

How to Use the Calculator

  1. Enter the Initial Value of your investment or amount.
  2. Enter the Final Value of your investment or amount.
  3. Enter the Number of Years over which the growth occurred.
  4. Click the Calculate button to compute the annual average growth rate.
  5. The result will be displayed as a percentage in the Annual Average Rate (%) field.

Example

If you invested $10,000 and after 5 years it grew to $15,000, the calculator will compute the annual average growth rate:

  • Initial Value: $10,000
  • Final Value: $15,000
  • Number of Years: 5
  • Annual Average Rate: 9.05%

Principle Explanation

The Annual Average Rate (AAR) is calculated using the compound annual growth rate (CAGR) formula. It represents the constant compound interest rate that would be required for an investment to grow from its initial value to its final value over the specified period.