CAGR Calculator

CAGR, the compound annual growth rate, is the single yearly rate that would take a starting value to an ending value if growth compounded evenly every year. It is a way of describing growth over several years in one comparable number. It is not the rate earned in any particular year; the real path may have been far bumpier.

Divide the ending value by the starting value, raise the result to the power of 1 divided by the number of years, then subtract 1. For 10,000 growing to 25,000 over 7 years: 25,000 / 10,000 = 2.5; 2.5 to the power of 1/7 is about 1.1399; subtracting 1 gives 0.1399, or 13.99% a year. To check it, 10,000 × 1.1399^7 comes back to 25,000.

With the start value in A2, the end value in B2, and the years in C2, use =(B2/A2)^(1/C2)-1 and format the cell as a percentage. Recent versions of Excel and Google Sheets also have RRI, which returns the same rate: =RRI(C2,A2,B2). This calculator shows both formulas filled in with your own numbers, ready to paste.

The average annual return adds up each year's percentage change and divides by the number of years, which ignores compounding. Take 100 that rises 50% to 150, then falls 50% to 75. The average of +50% and −50% is 0%, yet the money shrank. The CAGR is (75 / 100)^(1/2) − 1, about −13.4% a year, which matches what actually happened. The more a value swings, the further the plain average drifts above the CAGR.

There is no single good number, because it depends on what is growing and the risk involved. Useful comparisons are the inflation rate over the same years (growth below it lost purchasing power), a relevant benchmark over exactly the same dates, such as a broad index fund for an investment or your market's growth for revenue, and how volatile the path was. A high CAGR over a short or hand-picked period says much less than a moderate one over many years.

Yes. If the ending value is below the starting value, the CAGR is negative. 10,000 falling to 7,000 over 3 years is (0.7)^(1/3) − 1, about −11.21% a year. What CAGR cannot handle is a starting value of zero, negative values, or a value that changes sign along the way, such as a loss turning into a profit. In those cases no constant yearly rate connects the two values, and the calculator explains why instead of printing a misleading number.

CAGR uses only two numbers: where a value started and where it ended. IRR, and XIRR for irregular dates, also account for money added or withdrawn along the way, such as monthly contributions or dividends paid out. With a single investment at the start and nothing added or taken out, IRR matches the CAGR (XIRR can differ very slightly, because it counts the period in days on a 365-day year). Once there are interim cash flows, CAGR is distorted and IRR or XIRR is the right measure.

Annualizing assumes the pace of a short period carries on for a full year and compounds. A 10% gain over three months becomes 1.1^4 − 1, about 46.41% a year, which is a projection rather than a result. For periods under a year, quote the total return, and read any annualized figure as a pace. The calculator warns whenever the period is shorter than a year.

Use the revenue of the first and last years, and count the gaps between them rather than the years listed. Revenue of 2.0 million in 2020 and 3.2 million in 2024 spans 4 years of growth, not 5: (3.2 / 2.0)^(1/4) − 1 is about 12.47% a year. Counting 5 would understate it at about 9.86%. Choose Plain numbers in the calculator if the values are not money, such as users or units sold.

Dividing 72 by a yearly growth rate in percent gives a quick estimate of the years needed to double. At 8% a year that is 72 / 8 = 9 years, against an exact 9.01. The shortcut is close for rates between roughly 2% and 20% and drifts outside that band, so the calculator shows the exact doubling time, ln 2 / ln(1 + rate), next to the estimate.