CAGR Calculator

Calculate the compound annual growth rate between a start and end value, or project a future value from a CAGR. The CAGR calculator also shows the total growth and multiple.

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CAGR
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Estimate only. Not financial advice.

How to use the CAGR Calculator

  1. Choose Growth rate (CAGR) or Future value from a CAGR.
  2. Enter the Starting value, and the Ending value or the CAGR, and the number of Years.
  3. Press Calculate. The yearly growth rate or the future value appears, with the total growth.

How it works

CAGR = (end ÷ start)^(1 ÷ years) − 1
future value = start × (1 + CAGR)^years

CAGR is the steady yearly rate that would take the start value to the end value, smoothing out the ups and downs in between.

Examples

  • $10,000 growing to $20,000 in 5 years: 2^(1/5) − 1 = 14.87% a year.
  • Revenue rising from $5,000 to $8,000 in 3 years: 16.96% a year.
  • $10,000 growing at 8% a year for 10 years: $21,589.25.

CAGR versus average return

An investment that gains 50% one year and loses 50% the next has an average return of 0%, yet it is down 25%. CAGR reports that honestly as −13.4% a year. That is why CAGR is the standard way to compare growth over several years.

Limitations

  • CAGR hides volatility: two investments with the same CAGR can take very different paths.
  • Deposits and withdrawals along the way are not handled. Use a money-weighted return for those.
  • The starting value must be greater than zero.

Frequently asked questions

How do I calculate CAGR?

Divide the end value by the start value, raise it to the power of 1 ÷ years, and subtract 1.

What is a good CAGR?

It depends on the asset. Broad stock markets have averaged around 7% to 10% a year over long periods.

Can CAGR be negative?

Yes, when the end value is lower than the start value.

Often used together with the CAGR Calculator.