CAGR Calculator: Find Your Compound Annual Growth Rate

How to use the cagr calculator

1. Enter the beginning value of your investment, revenue or metric.
2. Enter the ending value after the time period has passed.
3. Enter the number of years between the two values. Use decimals for partial years, such as 0.5 for six months.
4. The CAGR calculator updates instantly and displays the compound annual growth rate along with total return.

How CAGR is calculated

The compound annual growth rate formula is:

CAGR = (Ending Value / Beginning Value)(1 / Years) - 1

For example, if you invest $10,000 and it grows to $25,000 over 10 years, the math works out as follows. First divide 25,000 by 10,000 to get 2.5. Then raise 2.5 to the power of 1/10 (or 0.1), which gives approximately 1.09596. Subtract 1 to get 0.09596, and multiply by 100 to express it as 9.60%. That means the investment grew at an average rate of 9.60% per year, compounded annually.

Common CAGR benchmarks

Knowing what a given rate means in practice helps put your results in context. The table below shows how long it takes to double an investment at various compound annual growth rates.

A 7.18% CAGR is notable because it exactly doubles capital every decade. Historically, broad US stock market indices have returned roughly 7% to 10% per year after inflation adjustments, depending on the exact start and end dates chosen.

When to use CAGR versus other metrics

CAGR smooths out volatility. If an investment jumps 50% one year and drops 30% the next, the simple average return is 10%, but the actual money gained is less than that suggests. The compound annual growth rate accounts for the compounding effect and gives the single constant rate that would produce the same final value.

Use this CAGR calculator when comparing investments held for different lengths of time. A fund that returned 40% over 3 years and another that returned 80% over 7 years are hard to compare directly, but their CAGRs (11.87% and 8.75% respectively) make the comparison straightforward. For projecting forward rather than looking back, a future value calculator applies a known rate to estimate where a balance will land.

Limitations and common mistakes

The most frequent error is using negative beginning values. Because the formula divides the ending value by the beginning value and then takes a fractional root, a negative starting point produces mathematically undefined results in real numbers. If your investment went from a loss to a profit, calculate the absolute dollar gain instead of using CAGR.

Another pitfall is treating CAGR as a guaranteed yearly return. It is a geometric average, not an arithmetic one. An asset can lose half its value in year one and triple in year two, yet still show a positive CAGR. Always look at the path of returns, not just the endpoints, when assessing risk.

Finally, ensure the time period is expressed in years. If you have monthly data spanning 36 months, enter 3 as the number of years, not 36. Entering 36 would annualize the rate incorrectly and produce a much smaller figure.

Practical applications beyond investing

While investors rely on CAGR heavily, businesses use it just as often. Revenue growth, user base expansion and cost reduction targets are all commonly expressed as compound annual rates because they account for compounding effects over multi-year plans.

For instance, if a company had 10,000 users three years ago and now has 25,000, the user base CAGR is about 35.72%. This single number lets leadership compare growth across divisions of different sizes on equal footing. Similarly, tracking expense reductions as a negative CAGR clarifies whether cost-cutting efforts are accelerating or slowing down over time.

Worked examples

Each result below was produced by the same code the tool runs, so you can check your own numbers against them.