Calculate CAGR
This CAGR calculator finds the smoothed annual growth rate between two values. Use it when an investment memo, forecast model, board pack, or performance report shows a beginning value, an ending value, and elapsed time.
The current result may appear to show steady annual performance, but treating it as the actual return in every year would hide volatility and timing risk. Compare the CAGR with an appropriate benchmark and then inspect the yearly path before making a decision.
CAGR inputs
| Input | What to enter |
|---|---|
| Beginning value | The value at the start of the measurement period |
| Ending value | The value at the end of the measurement period |
| Number of years | The total time between the two values, measured in years |
Enter positive beginning and ending values in the same currency or unit. The calculator returns CAGR as a percentage per year.
For example, a decimal result of 0.08 equals a percentage rate of 8% per year. Use the result for an endpoint comparison, then review the assumptions and the path between those endpoints.
What Does the CAGR Result Mean?
The CAGR result represents the constant annual rate that would compound the beginning value into the ending value over the stated number of years. It is useful for comparing the long-term growth of investments, revenue, customers, or another consistently measured value.
A higher CAGR may indicate faster compound growth relative to an alternative measured over the same period and on the same basis. It does not necessarily indicate better quality or lower risk.
A low range might fall below your comparison benchmark, a mid range might be near it, and a high range might exceed it. The relevant percentage boundaries depend on the asset, business, period, and risk basis.
This calculator does not supply a universal decision threshold.
CAGR also differs from a simple average return. If yearly results are 20%, −10%, and 15%, adding those percentages and dividing by three does not reflect compounding.
The formula instead uses the initial value, final value, and full time period. Its interpretation depends on the measurement methodology and the path between those values.
CAGR Formula and Methodology
The business question is: what constant annual rate connects a positive beginning value with a positive ending value over a stated number of years? The CAGR formula calculates that geometric annual growth rate:
\text{CAGR}=\left(\frac{EV}{BV}\right)^{1/n}-1Where:
- CAGR = compound annual growth rate, expressed as a decimal per year
- EV = ending value at the end of the measurement period, in dollars or the same unit as the beginning value
- BV = beginning value at the start of the measurement period, in dollars or another positive unit
- n = elapsed measurement period, expressed in years
Multiply the decimal CAGR by 100 to express it in percentage form. The calculator assumes annual compounding, consistent measurement units, positive endpoint values, and no separate deposits, withdrawals, dividends, fees, taxes, or other cash flows.
The sign convention treats growth as positive and decline as negative. Use a year-based period count with the annual rate; mixing monthly and yearly units distorts the result.
This tool applies a mathematical formula and was reviewed on August 11, 2026. It does not depend on a market rate or government threshold.
For calculators that model contributions and compound interest, see the Investor.gov compound interest calculator. The worked example below shows each calculation step.
Worked CAGR Example
Example: Assume an investment memo shows a beginning value of $25,000, an ending value of $40,000, and a five-year measurement period. All values are in US dollars, the endpoints are measured at the beginning and end of the period, and there are no additional contributions, distributions, fees, or taxes.
\text{CAGR}=\left(\frac{40{,}000}{25{,}000}\right)^{1/5}-1\text{CAGR}=(1.6)^{0.2}-1=0.09856\text{CAGR percentage}=0.09856 \times 100=9.86\%Result: The decimal CAGR is 0.09856, and the percentage CAGR is approximately 9.86% per year.
Interpretation: $25,000 compounded at a constant annual rate of approximately 9.86% for five years would reach $40,000. This does not mean the investment earned 9.86% during each individual year or that its future return will match this historical rate.
Change the ending-value assumption to $35,000 while keeping the $25,000 beginning value and five-year period unchanged:
\text{CAGR}=\left(\frac{35{,}000}{25{,}000}\right)^{1/5}-1\text{CAGR}=(1.4)^{0.2}-1=0.06961\text{CAGR percentage}=0.06961 \times 100=6.96\%The CAGR falls from 9.86% to 6.96% because less total growth occurs over the same five-year period. Change this assumption and the result moves because the ending-value ratio falls from 1.6 to 1.4.
Decision rule: Compare both results with the same-period benchmark and the yearly path. The higher endpoint clears a given hurdle rate only if 9.86% exceeds that rate on a comparable basis; the formula does not determine whether the volatility, fees, or risk are acceptable.
CAGR Calculator Limitations
The CAGR calculator cannot show volatility, interim losses, cash-flow timing, or the causes of growth. It compresses the entire period into one compound rate, so two investments may have the same CAGR despite having materially different risk and return patterns.
The formula is unsuitable when the beginning value is zero or when either endpoint is negative because the standard calculation may become undefined or misleading. For periods shorter than or between whole years, use an accurate fractional year count, such as months divided by 12, and disclose that timing assumption.
CAGR also omits dividends, deposits, withdrawals, fees, and taxes unless they are already included in the ending value. These items are cash flows, which differ from accounting profit and from an endpoint valuation.
When irregular cash flows matter, an internal rate of return calculation may be a more appropriate cross-check. A growth rate return based only on endpoints cannot capture those flows.
These limitations shape the questions below.
CAGR Calculator FAQ
The CAGR calculator is accurate for valid inputs under its stated assumptions, but its usefulness depends on consistent values, periods, and cash-flow treatment.
How accurate is the CAGR calculator?
The calculator follows the formula directly, subject to display rounding. Its output may differ slightly from a spreadsheet that retains more decimal places.
Verify that both methods use the same beginning value, ending value, number of years, timing convention, and rounding method.
Is CAGR the same as annual return?
No. CAGR is a smoothed annual rate between two endpoints, while an actual yearly return records the change during a particular year.
This growth rate return does not reveal the sequence of gains and losses.
Does the calculator store my financial information?
Storage and transmission depend on the calculator’s verified implementation and privacy policy. Before entering sensitive investment data, confirm whether calculations occur locally and whether submitted values are logged or transmitted.
What should I do after finding CAGR?
After finding CAGR, compare it with an appropriate benchmark over the same period and on the same basis. Then inspect yearly results, fees, cash flows, risk, and inflation rather than treating the percentage as a complete decision rule.
CAGR describes the endpoint growth rate; cross-check the yearly path and test a lower ending value before relying on it.
Use the calculator result as one comparison input, not as a forecast or personalized investment recommendation.