CAGR Calculator
Find the compound annual growth rate between two values over a time period.
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CAGR represents the constant annual growth rate that would take the start value to the end value over the specified period. It smooths out volatility into a single rate.
Worked Example
When to Use This Calculator
Use CAGR when you need a single annualized growth rate to describe historical performance. It is widely used for comparing investment returns, revenue growth, and other metrics over different time spans.
Important Assumptions
- Growth is smoothed to a constant rate — actual year-to-year returns may vary significantly.
- No cash flows (contributions or withdrawals) during the period.
Common Mistakes to Avoid
- Assuming CAGR means the investment grew by that percentage every year — it is an average that accounts for compounding.
- Using CAGR for short periods (under 1 year) where it may not be meaningful.
Frequently Asked Questions
What is CAGR?
Compound Annual Growth Rate (CAGR) is the annualized rate of return that takes an investment from its beginning value to its ending value, assuming profits are reinvested each year.
Is CAGR the same as average return?
No. A simple average of annual returns ignores compounding. CAGR accounts for the compounding effect, giving a more accurate picture of long-term growth.