Free Tool
CAGR Calculator
Calculate the Compound Annual Growth Rate between two values over any time period — instantly.
CAGR Calculator
How It Works
Understanding CAGR calculation
CAGR answers the question: "What steady annual growth rate would take my initial value to my final value over this many years?" The formula is: CAGR = (Final Value ÷ Initial Value)^(1 ÷ Years) − 1.
Because it's based only on the start and end points, CAGR is a clean way to compare growth across investments or business metrics with different time horizons or volatility patterns.
FAQ
Frequently asked questions
What is CAGR?
CAGR (Compound Annual Growth Rate) is the average annual growth rate of an investment or business metric over a specified period, assuming growth compounds each year — smoothing out year-to-year volatility into a single growth figure.
How is CAGR calculated?
CAGR = ((Final Value ÷ Initial Value) ^ (1 ÷ Number of Years)) − 1, expressed as a percentage.
How is CAGR different from average annual return?
A simple average adds up each year's return and divides by the number of years, which can be misleading with volatile returns. CAGR reflects the actual compounded growth rate needed to go from the initial to the final value.
What is CAGR commonly used for?
CAGR is widely used to measure investment growth, business revenue growth, and other metrics that compound over multiple years, making it easier to compare growth across different time periods or investments.
Can CAGR be negative?
Yes — if the final value is lower than the initial value, CAGR will be negative, reflecting a decline over the period.
Does CAGR account for volatility within the period?
No, CAGR only considers the starting and ending values — it smooths out any fluctuations that happened in between.
Is this calculator free to use?
Yes, completely free, with no sign-up required.
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