📊 CAGR Calculator
Calculate the compound annual growth rate (CAGR) of an investment, business revenue or any value that changed over several years.
Quick answer: CAGR = (ending value ÷ beginning value)^(1 ÷ years) − 1. An investment that grows from $10,000 to $20,000 in 5 years has a CAGR of 14.87% a year.
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CAGR Calculator inputs
Result
Compound annual growth rate
14.87%
from $10,000.00 to $20,000.00 over 5 years
| Beginning value | $10,000.00 |
| Ending value | $20,000.00 |
| Total growth | 100% |
- Growth multiple
- 2×
- Doubling time at this rate
- 5 years
Smoothed growth path at 14.87% a year
| Year | Value |
|---|---|
| 0 | $10,000.00 |
| 1 | $11,486.98 |
| 2 | $13,195.08 |
| 3 | $15,157.17 |
| 4 | $17,411.01 |
| 5 | $20,000.00 |
The CAGR formula
CAGR answers the question: "What constant yearly growth rate would turn the starting value into the ending value?" It is the standard way to compare investments, company revenues or populations over different periods.
CAGR = (Ending value ÷ Beginning value)1 ÷ n − 1
n is the number of years. Fractions of a year are allowed – for 30 months use 2.5.
Worked example
A portfolio grows from $10,000 to $20,000 over 5 years. The ratio is 2, and 21/5 = 1.1487, so the CAGR is 14.87%. Check: $10,000 × 1.14875 = $20,000.
CAGR for a doubling over different periods
| Years to double | CAGR |
|---|---|
| 3 | 25.99% |
| 5 | 14.87% |
| 7 | 10.41% |
| 10 | 7.18% |
| 20 | 3.53% |
Where CAGR is used
- Investing: comparing fund or stock performance over different time frames.
- Business: reporting revenue, user or profit growth over several years.
- Planning: projecting a value forward at a historical growth rate.
Tips
- Use the exact time between the two values – a few months' difference changes the result noticeably over short periods.
- Compare CAGR with inflation to see real growth.
- Remember that past CAGR is not a forecast; actual returns vary from year to year.
Using CAGR to project forward
Rearranging the formula lets you estimate a future value: Future value = Present value × (1 + CAGR)n. A business with $2 million of revenue growing at a 12% CAGR would reach about $3.52 million in five years. Projections like this are only as reliable as the assumption that past growth continues, so test a few lower rates as well.
Estimates for educational purposes, not financial advice.
Frequently asked questions
What is CAGR?
Compound annual growth rate is the steady yearly rate that would take a starting value to an ending value over a period, assuming growth compounds each year. It smooths out the ups and downs along the way.
How is CAGR different from average annual return?
A simple average of yearly returns overstates growth when returns are volatile. A +50% year followed by a −50% year averages 0% but actually loses 25%; CAGR correctly reports −13.4% a year.
Can CAGR be negative?
Yes. If the ending value is below the beginning value, CAGR is negative, showing the average yearly rate of decline.
What are the limitations of CAGR?
It ignores the path between the two dates and any money added or withdrawn. For investments with regular contributions, use an IRR or money-weighted return instead.