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 by the CalcBundle Research & Editorial Team · Reviewed by the Quality Review Team · Transparent formulas · results are estimates, not advice. · Updated
CAGR
Enter beginning, ending values and years greater than zero.
Quick Answer
What is CAGR and how is it calculated?
CAGR — Compound Annual Growth Rate — is the steady annual rate that takes a starting value to an ending value over a given number of years. The formula is: CAGR = (Ending Value ÷ Beginning Value)^(1 ÷ Years) − 1. A business with $1 million revenue in 2020 growing to $1.8 million by 2025 has a CAGR of approximately 12.5% per year. CAGR is a smoothed rate — it ignores year-to-year volatility and shows only the equivalent steady growth over the full period. This makes it the standard for comparing investments or business metrics with different time horizons. CAGR above 15% is generally considered strong for an established business; early-stage companies often show CAGRs of 50–100%. This calculator also reverses the formula: enter a CAGR and beginning value to project an ending value or the number of years required to reach a growth target — useful for planning or checking whether a forecast is realistic.
What a CAGR calculator does
A CAGR calculator answers a deceptively simple question: if a value had grown by the same percentage every single year, what would that percentage be? Real growth is almost never smooth — an investment might jump 30% one year and fall 10% the next — but comparing those jagged paths is hard. CAGR replaces the bumps with one equivalent steady rate, which is why it has become the standard shorthand for describing the growth of an investment, a revenue line, a user base or any quantity measured at two points in time. This calculator computes it in both directions: give it a start and end value to find the rate, or fix the rate to solve for the ending value, starting value or number of 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
This is where CAGR earns its keep. If an investment gains 50% one year and loses 50% the next, the simple arithmetic average is 0% — yet $100 became $150 and then $75, a real loss of 25%. CAGR captures that reality because it reflects compounding, while a naive average does not. Whenever returns are volatile, the CAGR is lower than the arithmetic average, and the gap widens with volatility. It is the same compounding logic used by the compound interest calculator and the investment return calculator.
Worked example
Say $10,000 grows to $20,000 over five years. The CAGR is (20,000 ÷ 10,000)1/5 − 1, which is about 14.87%. In other words, a steady 14.87% a year would double your money in five years — a neat illustration of why the rule of 72 (72 ÷ 14.87 ≈ 4.8 years to double) is such a handy shortcut. Reverse the calculation and you can ask the opposite: at 10% a year, how long to double? About 7.3 years.
What CAGR does not tell you
CAGR assumes smooth compounded growth, which is precisely its blind spot. It says nothing about how bumpy the journey was, nothing about the worst drawdown along the way, and nothing about risk. Two investments with an identical CAGR can feel completely different to live through — one a gentle climb, the other a rollercoaster. CAGR also ignores dividends and any money added or withdrawn mid-period. Use it to compare and summarise, never as a promise of what comes next.
Related calculators
To fold in contributions, fees and withdrawals, use the investment return calculator; to project a lump sum forward at an assumed rate, the lump sum investment calculator; and to see how inflation erodes a nominal growth rate, the inflation calculator.
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.
What is a good CAGR for an investment?
It depends entirely on the asset and the risk. Broad stock indices have historically delivered a CAGR of roughly 7–10% before inflation over long periods; a savings account might manage low single digits; a fast-growing company's revenue could show 30%+ for a few years before slowing. A CAGR is only meaningful next to a relevant benchmark and the risk taken to achieve it.
Can CAGR be negative?
Yes. If the ending value is lower than the beginning value, the CAGR is negative — it simply describes a steady annual rate of decline instead of growth. This is useful for quantifying how quickly something shrank, such as a declining revenue line or an investment that lost value over the period.
Does CAGR account for dividends or contributions?
No. Basic CAGR only looks at a beginning value and an ending value, so it ignores dividends, interest and any money you added or withdrew along the way. For an investment with regular contributions or income, use the investment return calculator, which handles cash flows, rather than reading CAGR alone.
Related calculators
Sources & methodology
- Formula
- CAGR = (Ending Value ÷ Beginning Value)^(1 ÷ Number of Years) − 1
- Reviewed
- September 2026
Primary sources
- CFA Institute – Measures of ReturnCFA curriculum derivation of the geometric mean return formula, which is the theoretical basis for CAGR.
- SEC – How to Calculate Investment ReturnSEC Investor Education guidance on annualised return calculation for investments held over multiple years.
Calculation methodology is documented on our methodology page. Reviewed by the CalcBundle Quality Review Team.
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.