CAGR Calculator
Enter a beginning value, an ending value and a number of years to find the compound annual growth rate, the smooth yearly rate that links the two.
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Enter beginning and ending values and years to see CAGR.
Worked example
With these example inputs:
- Beginning value$250,000
- Ending value$610,000
- Number of years8 yr
CAGR: 11.8%
- Total growth144.0%
Frequently asked questions
What is CAGR?
Compound annual growth rate is the constant yearly rate that would take a starting value to an ending value over a set period. It smooths out year-to-year swings.
Why use CAGR instead of average growth?
A simple average can mislead when returns vary. CAGR reflects compounding, so it shows the true annual rate an investment actually grew at over the whole period.
What is CAGR in simple terms?
CAGR stands for compound annual growth rate. It is the single steady yearly rate that would take your starting value to your ending value over the years. It smooths out the bumps, as if growth happened at the same pace every year. So it gives one clean rate you can compare across different things.
How does the tool work out the rate?
It divides the ending value by the beginning value to get the total growth factor. Then it takes the root of that factor over the number of years, and subtracts one. For 10,000 growing to 16,000 over five years, the CAGR is about 9.86 percent. The result is shown as a yearly percentage.
Why is CAGR different from the total growth?
Total growth is the whole change from start to end, such as 60 percent over five years. CAGR spreads that gain evenly across each year, which gives a smaller yearly figure like 9.86 percent. The two answer different questions, one about the whole period and one about a typical year. Remember the smooth rate hides any ups and downs along the way.