How the CAGR Calculator works
Calculate compound annual growth rate. Adjust the inputs above, then use the calculate button to generate a fresh estimate based on the numbers you entered.
The result is designed to give you a quick planning number, plus a short breakdown of the major figures behind it. You can reset the form at any time and try a different scenario.
When to use this calculator
Use this CAGR calculator to estimate the smoothed annual growth rate between a starting value and ending value. It is useful for comparing investments or business growth over different time periods.
Formula
CAGR = (ending value / starting value)^(1 / years) - 1
- Starting value is the value at the beginning of the period.
- Ending value is the value at the end of the period.
- Years is the length of the period.
Worked example
For a starting value of $10,000 and ending value of $18,000 over 5 years, the calculator estimates a CAGR of about 12.5%.
Common mistakes
- Thinking CAGR means returns were the same every year.
- Ignoring contributions or withdrawals during the period.
- Comparing CAGR without considering volatility and risk.
FAQs
Is CAGR an average return?
It is a smoothed annual growth rate, not a simple arithmetic average.
Does CAGR handle contributions?
No. It works best when there are no additions or withdrawals between starting and ending value.
Can CAGR be negative?
Yes. If ending value is lower than starting value, CAGR is negative.