📊 CAGR Calculator
Calculate Compound Annual Growth Rate
How to Use This Calculator
Enter Beginning Value
Input the starting value of your investment or metric (e.g., $10,000).
Enter Ending Value
Input the final value of your investment or metric (e.g., $25,000).
Enter Number of Years
Input the time period over which the growth occurred (e.g., 5 years).
View Results
Click "Calculate CAGR" to see your compound annual growth rate and total growth percentage.
Formula
CAGR = ((Ending Value / Beginning Value)(1/Years)) - 1
The result is multiplied by 100 to express as a percentage
Example Calculation:
If an investment grew from $10,000 to $25,000 over 5 years:
Step 1: Calculate growth ratio
Growth Ratio = $25,000 / $10,000 = 2.5
Step 2: Calculate CAGR
CAGR = (2.5(1/5)) - 1
CAGR = (2.50.2) - 1
CAGR = 1.2011 - 1 = 0.2011
CAGR = 20.11%
About CAGR Calculator
The CAGR (Compound Annual Growth Rate) calculator helps you determine the average annual growth rate of an investment or business metric over a specific time period. CAGR smooths out volatility and provides a single annual growth rate that represents the average performance, making it ideal for comparing investments with different time periods. It's one of the most widely used metrics in finance and business for evaluating long-term performance.
When to Use This Calculator
- Investment Analysis: Calculate the average annual return on investments over multiple years
- Portfolio Performance: Evaluate how your investment portfolio has grown over time
- Business Metrics: Measure revenue, profit, or customer growth rates
- Stock Performance: Compare stock price growth across different time periods
- Investment Comparison: Compare different investments with varying time horizons on an equal basis
Why Use Our Calculator?
- ✅ Accurate CAGR: Calculates compound annual growth rate using precise formulas
- ✅ Easy Comparison: Compare investments with different time periods on an equal basis
- ✅ Complete Analysis: Shows both CAGR and total growth percentage
- ✅ 100% Free: No registration or payment required
- ✅ Mobile Friendly: Works seamlessly on all devices
- ✅ Clear Results: Displays formula breakdown and projections for better understanding
Common Applications
Investment Portfolio Evaluation: Calculate how your investment portfolio has performed over time. For example, if your portfolio grew from $50,000 to $100,000 over 7 years, the CAGR is 10.41%, which you can compare with market indices or investment benchmarks.
Stock Analysis: Evaluate individual stock performance. A stock that went from $20 to $60 over 5 years has a CAGR of 24.57%, which helps you assess its growth potential and compare with other stocks or the market average.
Business Revenue Growth: Track company revenue growth. A business that grew from $1 million to $5 million over 10 years has a CAGR of 17.46%, showing strong long-term growth performance.
Mutual Fund Performance: Compare mutual fund returns. CAGR helps you understand the average annual return of a fund over its lifetime, making it easier to compare funds with different inception dates.
Tips for Best Results
- Use actual beginning and ending values for accurate calculations
- CAGR assumes steady growth, which may not reflect actual year-to-year volatility
- Compare CAGR only for investments or metrics with similar risk profiles
- Remember that CAGR doesn't account for cash flows during the period
- For investments with regular contributions, consider using IRR instead
Frequently Asked Questions
What is CAGR?
CAGR (Compound Annual Growth Rate) is the average annual growth rate of an investment over a specific time period, assuming that growth compounds. It provides a smoothed annual growth rate that represents the average performance, making it ideal for comparing investments with different time periods.
How is CAGR different from average return?
Simple average return divides total growth by the number of years. CAGR accounts for compounding, meaning it assumes growth builds on previous growth. CAGR is more accurate for comparing investments because it reflects the compounding effect over time.
Can CAGR be negative?
Yes, if the ending value is less than the beginning value, CAGR will be negative, representing an average annual loss. For example, if an investment goes from $10,000 to $7,000 over 3 years, the CAGR is -11.19%.
Does CAGR account for volatility?
No, CAGR smooths out volatility and provides a single average growth rate. It doesn't show year-to-year fluctuations. An investment with volatile returns might have the same CAGR as one with steady returns, but very different risk profiles.
Why is CAGR useful for investment comparison?
CAGR is useful because it provides a single number that represents average annual growth, making it easy to compare investments or metrics with different time periods. It's the standard metric used in finance for evaluating long-term performance and comparing investments on an equal basis.