MihsabaHow to use
Compound annual growth rate converts the change from a starting value to an ending value into one hypothetical constant yearly rate that would connect the two over the same number of years. It is useful for comparing growth periods without claiming each real year actually grew at that rate.
- Enter a positive starting value.
- Enter the positive ending value and the number of years, including fractional years if needed.
- Calculate to see CAGR, total growth, absolute change and value multiple.
How it is calculated
Example
Example: growth from 10,000 to 15,000 over 5 years is 50% in total, but CAGR is about 8.447% per year because 10,000 × (1 + 0.08447)^5 ≈ 15,000.
Important notes
CAGR smooths only the path between two endpoints, so it hides volatility and intermediate cash flows. It is not directly meaningful when the starting or ending value is zero or negative because the fractional power of the ratio may not produce a meaningful real growth rate. Past growth does not guarantee future results.
Frequently asked questions
Is CAGR the arithmetic average of annual growth?
No. It is one compounded rate linking the start and end values, not the arithmetic mean of yearly percentages.
Can CAGR be negative?
Yes, when a positive ending value is below a positive starting value.
Is CAGR suitable with many deposits or withdrawals?
Not ideally. Intermediate cash flows require a measure that accounts for their timing, such as IRR or XIRR when appropriate data are available.
Is this calculator free?
Yes. It is free to use and requires no account.