CAGR Calculator
Where FV = Final Value, BV = Beginning Value, t = Time Period
CAGR Calculator
The CAGR Calculator helps you find the Compound Annual Growth Rate — the average yearly rate at which an investment grows over time, assuming profits are reinvested each year. It’s one of the simplest yet most powerful tools for evaluating business performance, mutual funds, or investment returns over multiple years.
What is CAGR (Compound Annual Growth Rate)?
CAGR stands for Compound Annual Growth Rate, a metric used to measure how an investment grows from its beginning value to its final value over a specific time period.
Unlike a simple average, CAGR smooths out fluctuations, showing the consistent annualized growth rate as if the investment had grown steadily each year.
Plain Text Formula:
CAGR % = ((FV / BV)^(1 / t) – 1) × 100
Where:
- FV = Final Value
- BV = Beginning Value
- t = Number of Years
In simple words, CAGR tells you the percentage rate at which your investment would have grown annually to reach the current value from the starting point.
You can also check how compounding affects your overall returns using our Investment Calculator, which helps you project future values based on different compounding intervals.
Why Use a CAGR Calculator?
The CAGR Calculator is ideal for comparing different investments, funds, or company performances over time. It eliminates the effects of volatility, providing a “smoothed” rate of return for the entire investment period.
For example, even if a stock fluctuates widely from year to year, CAGR tells you what average annual growth rate it achieved overall.
This is useful for:
- Analyzing business or investment performance
- Comparing historical returns between stocks or funds
- Estimating consistent growth rates for financial forecasting
You can also use it alongside our Future Value Investment Calculator to see how your investment might grow over time with compounded returns.
How to Calculate CAGR
Let’s calculate CAGR using a practical example.
Suppose a mutual fund’s value increased from 376 to 424 over 5 years.
Using the formula:
CAGR % = ((424 / 376)^(1 / 5) – 1) × 100
CAGR % = (1.1277^0.2 – 1) × 100
CAGR % = (1.0243 – 1) × 100
CAGR % = 2.43%
So, the investment grew at an average rate of 2.43% per year over the five-year period.
You can easily verify this result using the CAGR Calculator on CalculatorCave, which handles all calculations automatically.
CAGR Formula Explained
Let’s break down the Compound Annual Growth Rate formula step-by-step:
- Divide the final value (FV) by the beginning value (BV).
- Raise the result to the power of 1 divided by the number of years (t).
- Subtract 1 from that result.
- Multiply by 100 to convert it into a percentage.
Plain Text Example:
If your investment grows from 10,000 to 15,000 in 3 years:
CAGR % = ((15000 / 10000)^(1 / 3) – 1) × 100
CAGR % = (1.5^(0.3333) – 1) × 100 = 14.47%
This shows your investment grew at an average annual rate of 14.47%.
When to Use CAGR
CAGR works best when you want to analyze the average annual growth rate over time — especially for long-term investments.
It’s most commonly used to:
- Evaluate company revenue growth
- Measure investment performance
- Track portfolio returns
However, it’s important to note that CAGR assumes steady growth, so it doesn’t reflect short-term volatility. For investments with frequent ups and downs, you may also want to look at annualized returns or real-time value changes using the Investment Inflation Calculator to understand how inflation affects your true gains.
CAGR for Non-Annual Periods
While CAGR typically measures yearly growth, you can also apply it to months, quarters, or days.
To do this, adjust the exponent according to the time unit:
CAGR % = ((FV / BV)^(n / t) – 1) × 100
Where:
- n = Number of periods per year (12 for months, 4 for quarters, 52 for weeks, 365 for days)
- t = Number of periods you’re measuring
For example, if you’re calculating for 8 months, the exponent becomes 12 / 8 = 1.5.
This helps you annualize shorter periods while keeping consistency with standard CAGR calculations.
Reverse CAGR Calculations
Sometimes, you know the CAGR percentage and want to find another variable — such as the beginning value, final value, or time period.
Here are the reverse formulas:
- Find Beginning Value (BV):
BV = FV / (1 + CAGR)^t - Find Final Value (FV):
FV = BV × (1 + CAGR)^t - Find Number of Periods (t):
t = ln(FV / BV) / ln(1 + CAGR)
These formulas are perfect for financial modeling or forecasting growth targets. For more long-term savings insights, use the Retirement Savings Calculator to project how your savings may grow over time with compound interest.
Calculate CAGR in Excel
If you prefer using Excel or Google Sheets, here’s the plain text CAGR formula you can use:
=ROUND(((POWER((Final Value / Beginning Value),(1 / Years))-1)*100),4)
Example Spreadsheet Setup:
| A | B |
|---|---|
| Beginning Value | 100000 |
| Final Value | 1000000 |
| No. of Years | 5 |
| CAGR % | =ROUND(((POWER((B2/B1),(1/B3))-1)*100),4) |
Result: 58.4893% CAGR
This simple Excel setup helps you verify your online calculations or create your own financial growth templates.
Limitations of CAGR
CAGR is a powerful metric but not perfect. It assumes constant growth, which rarely happens in real-world investments. Market fluctuations, inflation, and timing of returns can all affect actual growth.
For a more realistic analysis, consider using inflation-adjusted metrics with our Investment Inflation Calculator or explore multi-year projections with the Future Value Investment Account Calculator for compounding comparisons.
The CAGR Calculator is an essential financial tool that simplifies the process of measuring average growth rates across years or months. Whether you’re assessing a stock, startup, or savings plan, CAGR gives you a clear view of long-term performance without the noise of market volatility.
By pairing CAGR with other financial tools like the Investment Calculator or Retirement Savings Calculator, you can make smarter, data-driven financial decisions and plan for sustainable growth.