How to use the cagr calculator
- Choose what to find: the growth rate (CAGR), the ending value at a given rate, or the years needed to reach a target.
- Enter the beginning value and the other two inputs for your choice, such as the ending value and the number of years.
- Decimals are fine for years, so 2.5 means two and a half years.
- Read the headline, the total growth, the simple average for comparison and the table of values for each year.
Formula
CAGR = (ending value / beginning value)^(1 / years) - 1
Ending value = beginning value x (1 + CAGR)^years
Years = ln(ending value / beginning value) / ln(1 + CAGR)
Time to double = ln(2) / ln(1 + CAGR)
CAGR is the single steady yearly rate that would turn the beginning value into the ending value. It assumes nothing was added or withdrawn along the way.
Worked examples
Finding the rate: an investment that grows from $10,000 to $19,500 in 7 years has a CAGR of 10.01%. The total growth is 95%, and dividing by 7 gives a simple average of 13.57% a year, which overstates the compounded rate. At 10.01% a value doubles in about 7.27 years.
Doubling: growing from $100 to $200 in 10 years is 7.18% a year. A loss: $5,000 falling to $4,000 over 3 years is a CAGR of -7.17%.
Projecting forward: $10,000 growing 8% a year for 7 years reaches $17,138.24, and at 8% it takes about 8.68 years to reach $19,500.
Why CAGR differs from the simple average
If a value rises 50% one year and falls 50% the next, the simple average return is 0%, yet $100 becomes $75. CAGR corrects for this because it describes compounding. In the main example the total growth of 95% over 7 years looks like 13.57% a year when divided evenly, but only 10.01% compounded gets you from $10,000 to $19,500.
What CAGR does not tell you
CAGR hides the path. Two investments can share the same CAGR while one was smooth and the other swung wildly. It also ignores contributions and withdrawals, so use it for a single starting value and a single ending value. For investments with regular deposits, see the compound interest calculator or a money-weighted return tool.
The result depends on the start and end dates you pick. Starting at a market low or ending at a high can inflate a CAGR, so compare several periods before drawing conclusions.
Using CAGR for business and other growth
CAGR works for anything that compounds: revenue, users, a population or a price index. Enter the starting and ending figures and the number of years between them. The dollar signs in the labels are only for formatting, so treat the numbers as units of whatever you are measuring.
Assumptions and limits
- Growth compounds once a year at a constant rate. For other compounding periods use the compound interest or present value calculators.
- The beginning value must be greater than zero. An ending value of zero is allowed and gives a CAGR of -100%.
- Contributions, withdrawals, dividends, taxes and fees are not included. Only the first and last values matter.
- The table shows the value at a steady rate, not the actual path of the investment.
- Past growth does not predict future results. This is arithmetic, not advice.
Frequently asked questions
What is a good CAGR?
There is no universal answer because it depends on the asset, the period and the risk taken. Compare a CAGR with similar investments over the same dates and with inflation. A higher CAGR from a riskier asset is not automatically better.
How do I calculate CAGR in a spreadsheet?
Divide the ending value by the beginning value, raise the result to the power of one divided by the years, and subtract one. This page does the same thing and also lists the value at the end of each year.
Can CAGR be negative?
Yes. If the ending value is lower than the beginning value, the CAGR is negative. For example, $5,000 falling to $4,000 over 3 years is about -7.17% a year.
What if I added money along the way?
CAGR assumes no deposits or withdrawals, so added money would make the rate look better than the investment really performed. Use a calculator that handles regular contributions, or measure the return of each period separately.
How do I find the years to reach a goal?
Choose the years option, enter the starting value, the goal and an annual rate. The tool solves for the time using logarithms. It tells you if the rate and direction make the goal impossible, such as a falling value that must rise.