CAGR Calculator
The steady yearly rate that turns one figure into another over a number of years, which is not the total growth divided by the years.
Results
What this tool does
Compound annual growth rate is the honest way to describe how fast something grew. Give it what you started with, what you ended with and how long it took, and it returns the constant yearly rate that would have produced the same result. It is the figure funds quote, the figure business plans use for revenue, and the figure that stops an 85 per cent gain over five years from being advertised as 17 per cent a year.
Formula
CAGR = (final value ÷ initial value)^(1 ÷ years) − 1
Variables
| Symbol | Meaning | Unit |
|---|---|---|
bv | Value at the start | — |
ev | Value at the end | — |
n | Years between them | a |
G | Growth per year | % |
T | Total growth | % |
M | How many times over | x |
D | Years to double at this rate | a |
Worked example
- Value at the start10,000
- Value at the end18,500
- Years between them5 a
- Growth per year13.09 %
- Total growth85.00 %
- How many times over1.850 x
- Years to double at this rate5.6 a
Limitations
- This is an informational calculator, not personalised financial advice. Rates, fees, taxes and contract conditions vary between institutions and countries.
Frequently asked questions
Why not just divide the total growth by the number of years?
Because growth compounds. Something that rises 85 per cent over five years did not rise 17 per cent a year: each year's gain was earned on a larger amount than the year before. The correct answer here is 13.13 per cent, and the gap between the two widens the longer the period. Dividing is the single most common way of overstating a return.
Does the CAGR tell me what happened along the way?
No, and that is its weakness. It uses only the first value and the last one, so a steady climb and a crash followed by a recovery can produce exactly the same figure. It answers the question "what constant rate would have got me here?", which is useful for comparing two investments over the same period and useless for judging how bumpy the ride was.