Compound Annual Growth Calculator

The Compound Annual Growth Rate (CAGR) is one of the most essential metrics for evaluating how your investment, business revenue, or asset value has grown over time. Unlike simple average returns, CAGR smooths out volatility and presents a consistent “annual growth rate” as if the value had grown at a steady rate over the entire period. Our Compound Annual Growth Calculator lets you compute this rate instantly and accurately.

Compound Annual Growth Rate (CAGR) Calculator

🚀 How to Use the Calculator

Simply follow these steps:

  1. Enter the Beginning Value (initial investment or starting figure)
  2. Enter the Ending Value (final value after the investment period)
  3. Input the Number of Years (duration of growth)
  4. Click “Calculate” to instantly see:
    • The CAGR, expressed as a percentage
    • A comparison to simple average growth, if shown

You can also perform reverse calculations—for example, estimating the future value or years needed if you know CAGR and starting value.

🧠 Understanding the Formula

The CAGR formula is:

iniCopyEditCAGR = (Ending Value / Beginning Value)^(1 / Years) – 1

Where:

  • Ending Value (EV) = final value
  • Beginning Value (BV) = starting value
  • n = number of years (or compounding periods)

Simple growth (without compounding) is calculated as:

javaCopyEditSimple Rate = (EV – BV) / BV

But CAGR factors in compounding, showing a smoothed Annual Rate of Return. Instabase+1Investor.gov+1Wall Street Prep+11Investopedia+11CalculatorSoup+11Microsoft SupportET Money+5Corporate Finance Institute+5ICICI Direct+5ICICI Direct+6CalculatorSoup+6Wikipedia+6ICICI DirectET MoneyOmni Calculator

✅ Why CAGR Matters

  • Standardized Comparison: Easily compare investments with different durations or volatility. Investopedia
  • Compound Effect: Reflects how reinvested returns build up over time.
  • Forecasting Tool: Project future values assuming steady compound growth.
  • Insightful Holding Period Comparisons: Great for long-term growth tracking. WikipediaET Money

✨ Example Scenarios

Example 1: Stock Investment Growth

Example 2: Portfolio Gains

🔎 Compound vs. Simple Growth – Key Differences

📈 Additional Features

A robust CAGR calculator may also provide:

📝 Use Cases & Industries

Ideal for:

  • Personal investment tracking (stocks, mutual funds, ETFs)
  • Business revenue growth comparisons
  • Real estate or asset value modeling
  • Forecasting expected returns in finance & planning
  • Academic or professional financial analysis

ℹ️ Things to Know

  • CAGR smooths volatility: It doesn't reflect year-to-year ups and downs. ICICI DirectWikipedia+2Investopedia+2Investopedia+2
  • It’s hypothetical: Assumes identical growth every year—even when real returns vary.
  • Not suitable for irregular cash flows: For multiple inflows/outflows, IRR is better. Investopedia
  • Use consistent time units (years, not months) unless adapted formula is used.

🙋 20 Frequently Asked Questions (FAQs)

  1. What is CAGR?
    The annualized compound growth rate between two values over a specific period. Wikipedia
  2. Why use CAGR instead of simple average return?
    CAGR accounts for compounding; average return does not.
  3. What inputs are needed?
    Beginning value, ending value, and years of growth.
  4. How do I get 0.0914 as CAGR in Example 1?
    (1300/1000)^(1/3) – 1 ≈ 0.0914 → 9.14%
  5. Can CAGR be negative?
    Yes, if final value is lower than starting value due to decline.
  6. Does CAGR show volatility?
    No—it smooths volatility and hides year-to-year variations.
  7. What if I withdraw or add funds during period?
    CAGR isn't accurate for mixed contributions—use IRR instead. ICICI Direct+10Investopedia+10Corporate Finance Institute+10Instabase+7Investopedia+7ET Money+7Omni CalculatorWikipedia+8ET Money+8Omni Calculator+8Microsoft Support
  8. What is a good CAGR?
    Depends on context; ~8–10% is excellent historically for investments.
  9. Can I calculate CAGR monthly or quarterly?
    Yes—adjust exponent (1/months or 1/quarters) for compounding frequency. ICICI Direct
  10. How does CAGR relate to compound interest?
    It’s the implied annual rate from compound interest formula for an investment. Omni CalculatorInvestopedia
  11. Can I use CAGR to forecast future growth?
    Yes—assuming constant CAGR, future value = BV × (1 + CAGR)^n.
  12. Is CAGR the same as annual average return?
    No—average return ignores compounding; CAGR does not.
  13. How accurate is CAGR?
    Very accurate for simple investments with consistent reinvestment and timing.
  14. Can businesses use CAGR?
    Yes—common for tracking revenue, profit, or market expansion over time.
  15. Does compounding frequency matter?
    For annual CAGR, frequency is implicitly annual; frequency matters for more granular compounding. Omni CalculatorCalculatorSoup
  16. Can calculators reverse-calculate years?
    Yes, many support finding years needed given BV, EV, and CAGR. CalculatorSoup
  17. What is the Rule of 72?
    A shortcut estimating years to double value: 72 ÷ CAGR%. Wikipedia+1Investopedia+1
  18. Is CAGR useful for short periods?
    It's best for 1+ year horizons; for shorter periods, compounding may mislead.
  19. How does CAGR compare with IRR?
    IRR handles multiple cash flows; CAGR is for single lump-sum growth.
  20. How should CAGR be used in financial planning?
    Compare investments, forecast portfolios, set goals, or measure past performance.

✅ Final Thoughts

The Compound Annual Growth Calculator is a clear, simple, and powerful tool for measuring how your investments or values grow over time—even when growth varies year to year. By using beginning value, ending value, and time span, it returns a smoothed annualized return rate that’s perfect for comparisons and projections.