CAGR Calculator
Calculate the compound annual growth rate of an investment, business metric or any value that changes over multiple years.
How to Use the CAGR Calculator
Enter beginning value, ending value and number of years to calculate compound annual growth rate.
Practical Example
If an investment grows from USD 10,000 to USD 15,000 over 5 years, CAGR is about 8.45% per year.
Factors That Affect the Result
CAGR smooths growth into one annual rate and does not show volatility, intermediate cash flows, fees or taxes.
Frequently Asked Questions
Is CAGR an average return?
It is a compounded annualized growth rate.
Does CAGR show volatility?
No.
Can CAGR be negative?
Yes, when ending value is below beginning value.
Related Tools
How CAGR Helps Compare Growth
Compound annual growth rate expresses the smoothed yearly rate that would take a starting value to an ending value over a chosen number of years. It is useful for comparing investments, revenue, users, sales, or other quantities that change over multi-year periods. CAGR does not mean the value actually grew by the same percentage every year.
Formula and Example
The formula is CAGR = (Ending Value / Beginning Value)^(1 / Years) – 1. For example, if a value rises from 10,000 to 15,000 over three years, CAGR converts that total change into an equivalent annual compounded rate. This makes periods of different lengths easier to compare.
Important Limitations
CAGR hides volatility and the path taken between the first and last values. Two investments can have the same CAGR while one fluctuates dramatically and the other grows steadily. Use the result with risk, cash-flow timing, fees, inflation, and intermediate performance when making financial comparisons. A negative or zero starting value also requires different analysis because the standard CAGR formula is not meaningful in the usual way.