CAGR Calculator
Enter a starting value, an ending value and a number of years to get the compound annual growth rate.
What this tool does
CAGR is the constant yearly rate at which a value would have to grow to get from its start to its end in a given number of years. The formula is (end ÷ start) raised to 1 ÷ years, minus 1. For 1,000 growing to 2,000 over 10 years, the CAGR is 7.18% a year.
Calculates the compound annual growth rate for any two values over a period in years.
Also shows total percentage growth, the amount of change and the simple average yearly growth for comparison.
How to use it
- Enter the starting value.
- Enter the ending value.
- Enter the number of years (decimals allowed, such as 2.5).
- Read the CAGR and the supporting figures.
Why use this calculator
Turns a start value, an end value and a number of years into the one steady yearly growth rate that links them. Year-to-year growth bounces around, which makes an investment or a revenue line hard to compare. CAGR boils the whole period down to one rate so two different things can be compared on equal terms.
Why we built it
We built the CAGR calculator to turn a start value, an end value and a number of years into the one steady yearly rate that links them. The ROI calculator gives the total return, and the rule of 72 calculator estimates doubling time.
For a neighbouring job there is also the Dividend Calculator, the IRR Calculator and the NPV Calculator.
Who this tool is for
- Investors measuring long-run growth
- Business owners looking at revenue trends
- Students of finance
When to use it
- Comparing the performance of investments or funds over different periods.
- Describing business revenue, users or profit growth.
- Checking a growth claim in a report or presentation.
- Estimating the rate of return needed to hit a target.
How it works
CAGR = (ending value ÷ starting value)^(1 ÷ years) − 1. It assumes the value grew at the same rate every year with profits reinvested, which is the compounding assumption behind the formula.
Example: 10,000 growing to 18,500 over 5 years has CAGR (1.85)^(0.2) − 1 = 13.1% a year. The simple average is 17% a year (85% ÷ 5), which overstates the rate because it ignores compounding.
CAGR hides volatility: two investments with the same CAGR can have very different ups and downs along the way.
A worked example
These are the values the calculator opens with, so you can see exactly what it does with them. Change any value on the page and the result updates; the figures below come from the same calculation.
| Input | Value |
|---|---|
| Starting value | 10000 |
| Ending value | 18500 |
| Number of years | 5 |
With those inputs, the calculator returns:
- Compound annual growth rate: 13.093%
- Total growth: 85%
- Change in value: 8,500
- Simple average per year: 17%
- Formula: (18,500 ÷ 10,000) ^ (1 ÷ 5) − 1
What you give it, and what you get back
| Item | Details |
|---|---|
| Starting and ending value | Any two amounts in the same unit - money, users, units sold. The start must be above 0. |
| Years | The length of the period, in years; fractions are allowed. |
| Result | CAGR as a percentage per year. |
| Extras | Total growth, change in value and simple average growth. |
Issues you may run into
| What you see | Why it happens | What to do |
|---|---|---|
| "Starting value must be greater than 0" | CAGR cannot be calculated from zero. | Use the first non-zero value, or the percentage change instead. |
| CAGR looks lower than the average | The simple average ignores compounding. | The CAGR is the correct compounded rate. |
| Negative result | The value fell over the period. | A negative CAGR is a steady annual decline. |
| Wrong period length | The years count starts at the first value. | Count the years between the two dates, not the number of data points. |
Assumptions and limitations
- Assumes smooth compounding between the two points.
- Ignores volatility and any money added or withdrawn.
- It does not annualise partial years unless you enter them as decimals.
Frequently asked questions
What is CAGR?
Compound annual growth rate: the steady yearly rate that would take a value from its start to its end over a period, with growth compounding each year.
How do I calculate CAGR?
Divide the ending value by the starting value, raise the result to 1 divided by the number of years, and subtract 1.
What is a good CAGR?
It depends on the asset. Long-run stock market returns have been in the high single digits; for a business, the benchmark is its industry and size.
What is the difference between CAGR and average return?
The average adds yearly returns and divides. CAGR accounts for compounding and is the better measure of what an investment actually delivered.
Can CAGR be negative?
Yes. If the ending value is lower than the start, the CAGR is a negative rate of decline.
Does it include dividends or deposits?
Only if they are in the end value. It does not treat contributions separately.