Calculated from the sample figures using the displayed formula.
What is the cagr formula?
(Ending value ÷ Beginning value)^(1 ÷ Years) − 1Compound annual growth rate is the constant annual rate that connects a beginning value with an ending value.
What do the inputs mean?
- Beginning value
- The value entered for beginning value. Keep its period and units consistent with the other inputs.
- Ending value
- The value entered for ending value. Keep its period and units consistent with the other inputs.
- Years
- The value entered for years. Keep its period and units consistent with the other inputs.
How to calculate it step by step
- Define the decision.
Write down what the result will help you compare or decide. - Collect matching inputs.
Use figures from the same period and apply the definitions shown on this page. - Apply the formula.
(Ending value ÷ Beginning value)^(1 ÷ Years) − 1. - Check the units.
Confirm whether the result is a currency amount, percentage, number of periods or ratio. - Test a second case.
Change one assumption at a time to see what drives the result.
Worked example
Using the sample figures in the calculator, the result is 9.86%. Change one figure at a time and recalculate to see which assumption has the greatest effect. A spreadsheet should return the same result when it uses the same formula, units and timing.
When should you use cagr formula?
Use CAGR to summarize growth across multiple years.
Limitations and common mistakes
CAGR hides volatility and does not reflect interim cash flows.
Do not mix annual figures with monthly figures, ending balances with averages, or percentages with whole numbers. Record the definition used so another person can reproduce the result.
Frequently asked questions
What is cagr formula?
Compound annual growth rate is the constant annual rate that connects a beginning value with an ending value.
How should I use cagr formula?
Use the formula only after matching every input to the same period, unit and definition. Then compare the result with a worked example and the decision you are trying to make.
What is the most common mistake with cagr formula?
CAGR hides volatility and does not reflect interim cash flows.
Can I calculate cagr formula in a spreadsheet?
Yes. Reproduce the displayed equation with separate cells for each input, keep percentages as decimals, and test the spreadsheet against the worked example before replacing the sample figures.
Sources and methodology
This page uses the Beginners’ Guide to Financial Statements for the underlying financial or reporting context. Spreadsheet-related behavior is checked against Microsoft’s financial-function documentation. Examples are illustrative and use the formula displayed on the page.