How Do You Calculate an Annual Growth Rate?

According to Investopedia, to calculate an annual growth rate, take the ending value and divide it by the beginning value. Place that amount to the power of one over the number of years of growth, and subtract one from that amount. This averages growth over a period of years.

Although an investment may have grown from $5,000 to $15,000 in five years, it may have grown more in year two then it did in years one and three. However, the compound annual growth rate will still be 44.22 percent over the three years. By putting one in for the number of years of growth, a person can calculate the growth over one year.