Finance calculator
Standalone tool pageCAGR Calculator
Calculate the compound annual growth rate (CAGR) of any investment or business metric over multiple years.
Result
CAGR
Total growth
Growth %
How It Works
CAGR = (Ending Value / Beginning Value)^(1/years) - 1. It shows the smoothed annual growth rate assuming growth is compounded each year. For example, if an investment grew from $10,000 to $25,000 over 5 years, the CAGR would be 20.11%.
Example
If your investment grew from $10,000 to $25,000 over 5 years: CAGR = (25000/10000)^(1/5) - 1 = 20.11%. Your average annual return was 20.11% per year.
Common use cases
- Comparing investment performance across different assets or time periods.
- Forecasting future values based on historical growth rates.
- Evaluating business revenue or profit growth over time.
- Measuring portfolio or fund performance against benchmarks.
Frequently Asked Questions
What is CAGR?
CAGR stands for Compound Annual Growth Rate. It measures the mean annual growth rate of an investment or business metric over a specified period longer than one year, accounting for compounding.
What is the CAGR formula?
CAGR = (Ending Value / Beginning Value)^(1/years) - 1. It smooths out volatility to show what the annual return would be if growth were compounded each year.
How is CAGR different from average annual return?
A simple average ignores compounding. CAGR accounts for the effect of compounding, giving a more accurate picture of growth over multiple periods.
Can CAGR be negative?
Yes, if the ending value is lower than the beginning value, CAGR will be negative, indicating a decline over the period.