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CAGR Calculator

Calculate the Compound Annual Growth Rate (CAGR) to measure the mean annual growth rate of an investment over a specified period longer than one year. Essential for comparing investment performance.

Reviewed by Christopher FloiedPublished Updated

This free online cagr calculator provides instant results with no signup required. All calculations run directly in your browser — your data is never sent to a server. Enter your values below and see results update in real time as you type. Perfect for everyday calculations, homework, or professional use.

Minimum: 0.01

Minimum: 0.01

Minimum: 0.01

Results

CAGR

14.29%

How to Use This Calculator

1

Enter your input values

Fill in all required input fields for the CAGR Calculator. Most fields include unit selectors so you can work in your preferred unit system — metric or imperial, whichever matches your problem.

2

Review your inputs

Double-check that all values are correct and that you have selected the right units for each field. Incorrect units are the most common source of calculation errors and can produce results that are off by factors of 2, 10, or more.

3

Read the results

The CAGR Calculator instantly computes the output and displays results with units clearly labeled. All calculations happen in your browser — no loading time and no data sent to a server.

4

Explore parameter sensitivity

Try adjusting individual input values to see how the output changes. This is a quick and effective way to develop intuition about how different parameters influence the result and to identify which inputs have the largest effect.

When to Use This Calculator

  • •Use the CAGR Calculator when comparing financial options side-by-side — such as different loan terms or investment returns — to make more informed decisions.
  • •Use it to quickly estimate costs or returns before making purchasing, investment, or borrowing decisions.
  • •Use it for financial education and planning to understand how compound interest, fees, or tax affects the real value of money over time.
  • •Use it when building or reviewing a budget to verify that projections and calculations are mathematically correct.

About CAGR Calculator

The Compound Annual Growth Rate (CAGR) calculator determines the smoothed annual rate of return an investment would have earned if it had grown at a steady rate. Unlike simple average returns, CAGR accounts for compounding and provides a single number that represents the geometric progression ratio. It is the standard metric used by investors, analysts, and portfolio managers to compare the performance of different investments, funds, or business metrics over time. CAGR is especially useful when the actual year-over-year growth is volatile, as it strips out the noise and shows the effective annual rate. It is also commonly applied to revenue growth, user growth, and market expansion metrics in business contexts.

The Math Behind It

CAGR is calculated as (Ending Value / Beginning Value)^(1/n) - 1, where n is the number of years. This formula solves for the constant annual rate r such that Beginning Value * (1 + r)^n = Ending Value. Because it uses geometric compounding, CAGR is always less than or equal to the arithmetic average of annual returns (with equality only when all annual returns are identical). This difference is known as the volatility drag or variance drain. CAGR is a hypothetical smoothed rate; it does not reflect actual year-to-year volatility, which can significantly affect investor experience. For example, an investment that doubles then halves has a 0% CAGR but substantial risk. CAGR also ignores the timing and magnitude of cash flows, so for investments with deposits or withdrawals, the internal rate of return (IRR) is more appropriate. When comparing investments, CAGR should be supplemented with risk measures such as standard deviation, maximum drawdown, and Sharpe ratio. CAGR can be annualized to different periods (monthly, quarterly) by adjusting the exponent.

Formula Reference

CAGR Formula

CAGR = (Ending Value / Beginning Value)^(1/n) - 1

Variables: n = number of years

Worked Examples

Example 1: Stock portfolio growth

An investment grows from $10,000 to $19,500 over 5 years.

Step 1:CAGR = (19500/10000)^(1/5) - 1.
Step 2:= (1.95)^(0.2) - 1.
Step 3:= 1.1431 - 1 = 0.1431.

The CAGR is 14.31% per year.

Example 2: Company revenue growth

Revenue grew from $2M to $5M over 8 years.

Step 1:CAGR = (5/2)^(1/8) - 1.
Step 2:= (2.5)^(0.125) - 1.
Step 3:= 1.1214 - 1 = 0.1214.

The revenue CAGR is 12.14% per year.

Common Mistakes & Tips

  • !Confusing CAGR with the simple average of annual returns, which overstates growth when volatility is present.
  • !Using CAGR to predict future performance; past CAGR does not guarantee future results.
  • !Applying CAGR to periods with significant cash inflows or outflows, where IRR should be used instead.

Related Concepts

Future Value

Uses CAGR or a known interest rate to project what a present sum will be worth in the future.

ROI

Measures total return as a percentage of cost, without annualizing.

Used in These Calculators

Calculators that build on or apply the concepts from this page:

401(k) Retirement Calculator

Compound Interest Calculator

Holding Period Return Calculator

Inflation Calculator

Internal Rate of Return (IRR) Calculator

PEG Ratio Calculator

Present Value Calculator

ROI Calculator

Rule of 115 Calculator (Tripling Time)

Rule of 72 Calculator

Frequently Asked Questions

How is CAGR different from average annual return?

CAGR uses geometric compounding and accounts for the effect of gains on subsequent gains. The arithmetic average simply sums annual returns and divides by the number of years, which can overstate growth when returns are volatile.

Can CAGR be negative?

Yes, if the ending value is less than the beginning value, the CAGR will be negative, indicating the investment lost value over the period.

Is CAGR the same as IRR?

Only when there are no intermediate cash flows. If you make additional investments or withdrawals during the period, IRR accounts for their timing while CAGR does not.