CAGR Calculator – Compound Annual Growth Rate
Compute the compound annual growth rate between two values, or reverse the formula to solve for the ending value, beginning value, or number of years.
Written and reviewed by the CalcBundle editorial team. Transparent formulas · results are estimates, not advice.
CAGR
Enter beginning, ending values and years greater than zero.
What is CAGR?
The compound annual growth rate answers a simple question: if this value had grown by the same percentage every year, what would that percentage be? It is the most common way to describe the growth of an investment, revenue line or any quantity over multiple years.
CAGR formula
- CAGR = (Ending value ÷ Beginning value)1/years − 1
- Reverse: Ending = Beginning × (1 + CAGR)years
- Reverse: Years = ln(End ÷ Begin) ÷ ln(1 + CAGR)
CAGR vs average annual return
If an investment gains 50% then loses 50%, the simple average is 0% but you have actually lost money — CAGR captures that reality. This is the same compounding logic used by the compound interest calculator and the investment return calculator.
Limitations
CAGR assumes smooth compounded growth. It does not mean the investment actually grew at that rate every year, and it ignores volatility and risk. Use it to compare, not to predict.
Example
$10,000 growing to $20,000 over 5 years is a CAGR of about 14.87% — a doubling, expressed as a steady annual rate.
Frequently asked questions
What is CAGR?
CAGR (compound annual growth rate) is the constant yearly rate that would take a value from its beginning to its ending amount over a period, as if it grew smoothly each year. It is a standard way to summarise growth.
What is the CAGR formula?
CAGR = (ending value ÷ beginning value)^(1 ÷ years) − 1. For $10,000 growing to $20,000 over 5 years, CAGR ≈ 14.87%.
How is CAGR different from average annual return?
A simple average ignores compounding and can overstate growth. CAGR reflects compounding, so it is usually lower than the arithmetic average of yearly returns when those returns are volatile.
What are the limitations of CAGR?
CAGR smooths over volatility — it does not tell you how bumpy the ride was, and it says nothing about risk or interim losses. Two investments with the same CAGR can behave very differently year to year.
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Disclaimer. This calculator provides estimates for informational purposes only. Results are based on the information you enter and the assumptions used by the calculator. Actual financial, tax, business valuation, lending, marketplace or investment outcomes may differ. Consider consulting a qualified professional for decisions involving significant amounts of money. CAGR is a smoothed historical or projected rate and does not reflect year-to-year volatility or risk.