CAGR- How to calculate large CAGRs that double or more in the expected time frame?

CAGR case math Math problem
New answer on Aug 28, 2019
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Anonymous A asked on Aug 28, 2019

Hello All,

I am stuck at understanding shortcuts for estimating large CAGRs:

- eg: a CAGR of 20% for 6 years for let's say $10 M

- eg: a CAGR of 40% for 3 years

- Calculating CAGR, let's say 2006- $6M and 2016 $60M-- how to calculate this mentally?

Thank you very much for your help and suggestions.

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Vlad
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replied on Aug 28, 2019
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

You can use the rule of 72:

72 / 20 = 3.6 - 3.6 years takes it to double

6 / 3.6 = 1.5 - 1.5 times it will double

10M * 2ˆ1.5 = 30M

If you google the rule of 72 you'll find tons of examples

Best

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Vlad

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