CAGR Calculator

What Is CAGR?

The compound annual growth rate (CAGR) is the single yearly rate that, applied with compounding, carries a starting value to an ending value over a set number of years. It answers the question: if this had grown at the same pace every year, what would that pace have been? Investors use it to summarize a fund's or a stock's performance, businesses use it for revenue, users or profit, and analysts use it to compare things that grew over different lengths of time.

CAGR is a smoothed figure. A portfolio that rose 30% one year, fell 10% the next and rose 20% the year after has a single CAGR that describes the whole three years, even though no individual year looked like it.

How to Use the Calculator

Enter the beginning value, the ending value and the number of years between them. The period can include fractions, so an investment held from January 2021 to July 2025 is 4.5 years. The result shows the CAGR, the total growth over the whole period, the gain in dollars, and a year-by-year table of the value on a smooth path at that rate.

To go the other way, use the Ending Value from CAGR tool below the main form: enter a starting amount, an assumed growth rate and a period to see what the value would become.

The CAGR Formula

Divide the ending value by the beginning value, raise the result to the power of one over the number of years, and subtract one. With the default inputs, $10,000 grows to $19,000 in 5 years. The ratio is 19,000 ÷ 10,000 = 1.9, and 1.9^(1/5) = 1.1370, so the CAGR is 13.70%. Check it forward: $10,000 × 1.1370⁵ ≈ $19,000.

In a spreadsheet, the same calculation is =(EV/BV)^(1/n)-1, or Excel's RRI(n, BV, EV) function, which returns the equivalent rate directly.

CAGR = (EV ÷ BV)^(1 ÷ n) − 1

EV

ending value

BV

beginning value

n

length of the period in years

Rearranged, the ending value is EV = BV × (1 + CAGR)ⁿ, which is what the second calculator uses.

CAGR vs. Average Annual Return

The simple average of yearly returns overstates growth whenever returns vary. If an investment gains 50% one year and loses 50% the next, the average return is 0%, but $100 becomes $150 and then $75. The CAGR is (75 ÷ 100)^(1/2) − 1 = −13.40%, which matches what actually happened to the money.

Because CAGR uses only the first and last values, it is the right figure for asking what an investment earned, and the wrong one for judging how bumpy the ride was. Two funds can have the same CAGR with very different swings in between.

Limitations and Practical Tips

CAGR is easy to compute and compare, but keep its blind spots in mind:

• It ignores deposits and withdrawals. If you added money along the way, the ending value overstates growth; use an internal rate of return (IRR) or money-weighted return instead.
• It hides volatility. Pair it with the worst year or the maximum drawdown when comparing investments.
• It depends on the endpoints. Starting a measurement at a market low or ending at a peak can make the same investment look far better or worse.
• It is nominal. Subtract inflation, roughly, to see growth in purchasing power.
• Past CAGR does not predict future returns. Use conservative assumptions when you project forward.

Frequently asked questions

Sources

• Investor.gov – Introduction to Investing
• Investor.gov – Compound Interest Calculator