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CAGR
Find the compound annual growth rate between a starting and ending value.
Formula: (ending value ÷ starting value)1 ÷ years − 1, then multiply by 100. CAGR smooths the change into one annual rate.
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CAGR Calculator
CAGR — compound annual growth rate — smooths a bumpy ride into one steady yearly rate. Enter a starting value, an ending value, and the number of years to see the constant rate that connects them.
How the cagr calculator works
CAGR — compound annual growth rate — smooths a bumpy ride into one steady yearly rate. Enter a starting value, an ending value, and the number of years to see the constant rate that connects them.
The formula
CAGR = ((end ÷ start)^(1 ÷ years) − 1) × 100
Worked example
An investment grows from $10,000 to $16,000 over 5 years. (16000 ÷ 10000)^(1/5) − 1 ≈ 0.0986, so the CAGR is about 9.86% per year.
Where this comes in handy
- Investments: compare funds with different histories on equal footing.
- Business: summarize multi-year revenue growth in one number.
- Careers: measure average annual salary growth over a decade.
- Markets: describe long-run index performance.
CAGR Calculator — frequently asked questions
What does CAGR tell you that total growth does not?
CAGR expresses growth as a steady annual rate, making different time spans comparable. A 50% gain means something very different over 2 years versus 10.
Does CAGR show volatility?
No — that is its limitation. Two investments can share a 10% CAGR while one swung wildly and the other climbed smoothly.
Can CAGR be negative?
Yes. If the ending value is below the starting value, CAGR is negative, showing the average annual rate of decline.
How is CAGR different from average annual return?
A simple average of yearly returns overstates growth when returns vary. CAGR is the geometric mean — the single rate that actually gets you from start to finish.
What is a good CAGR?
Context decides: 7–10% is strong for broad stock markets long-term; a startup might target far higher; a savings account will be far lower.