Sometimes we have to estimate the forecast value of something based on some currently available data. In the planning stage of a city, we have to estimate the future population beforehand to design the necessary facilities for a certain amount of time like 50 or 100 years. In the economy, we know the current devaluation of money we can estimate the updated value of an asset after some certain period. So forecasting the future value based on the CAGR is very useful. In this article, we are going to discuss 2 easy and user-friendly ways to calculate the future value when the cagr value is known in Excel.
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What is CAGR?
The mean annual growth rate of a deposit over a defined time period longer than one year is the compound annual growth rate or CAGR. It stands for one of the most precise techniques to figure out returns for specific assets, investment portfolios, and anything else whose value can change over time.
FV is the Updated Value after a certain period.
PV is the present worth value.
CAGR is the Compound Annual Growth Rate %.
and n is the period number.
Learn to Calculate Future Value When We Know CAGR Value in Excel with These 2 Methods
In this article, we will use the general formula and the excel function to calculate future value when cagr is known. Let’s assume we have a dataset of the present population of a certain city. We have the present CAGR available in our hands. Now we will forecast what will be the population after 5 years. For our demonstration purpose, a snapshot of the sample dataset is as follows.
1. Using Reverse CAGR Calculator in Excel Formula to Approximate Future Value
In this section, we will discuss how to calculate future value when we know the CAGR value using the general formula. Therefore the step-by-step procedures are as follows.
⬇️⬇️ STEPS ⬇️⬇️
- Firstly we go to the formula box of cell C9 and write this formula.
- Here C5 is the current value of the population.
- C6 is the CAGR and C7 is the number of years.
- We hit the Enter button.
- Finally, we get the estimated future population in cell C9.
2. Employing FV Function with CAGR Value to Forecast
In this section, we will use the FV function to calculate future value when CAGR is known. So the breakdown steps are as follows.
⬇️⬇️ STEPS ⬇️⬇️
- Firstly we go to cell C9 and write this formula.
🔨 Formula Breakdown
👉 Here, C6 is the CAGR.
👉 C7 denotes the number of years.
👉 C5 means the current population.
- After that, we hit the Enter button.
- Finally, we get the result of future population estimation in cell C9.
📄 Important Notes
🖊️ When we use the Excel function we have to be careful about the function argument.
🖊️ We have to put a minus sign before fourth argument in the second method otherwise the result will be faulty.
📝 Takeaways from This Article
📌 We can use the available general formula to calculate future value when cagr is available.
📌 We can also use the FV function from Excel to calculate future value when cagr is known.
In this article, we have learned two simple ways to calculate future value when cagr is available. We can use the general formula or the FV function from Excel. Users can use whichever method they like. If you have any inquiries regarding this article please leave a comment in our comment section. The writer will try to answer them. If you want to explore further excel related problems you can visit our website www.Excelden.com.