CAGR calculator: compound annual growth rate
Measure compound annual growth over a chosen period, including total return and absolute change.
CAGR = (final value / initial value)^(1 / duration) − 1
Was this tool useful?
How does this tool work?
CAGR converts a multi-year change into a comparable compound annual growth rate. It is useful for comparing investments, revenue or metrics measured over different periods.
The calculation starts with the ratio between the ending value and the starting value, then applies a root based on the number of years in the period. The result is the constant annual rate that would have produced the same total change with compounding. It does not reproduce the actual year-by-year path, but it gives a practical compounded average for comparing periods of different lengths.
How to use this tool
Enter the values
Provide the starting value and the ending value.
Enter the duration
Set the number of years between both values.
Read the annualized rate
CAGR, total return and absolute change update automatically.
Good to know
Average annual rate versus average return
CAGR is not the arithmetic mean of yearly returns. An investment that gains 50% then loses 50% averages 0%, yet it has lost 25%: its CAGR is about −13.4% a year. CAGR describes the growth actually achieved.
Smoothing is not forecasting
CAGR hides year-to-year swings: two investments with the same CAGR may have followed very different paths. It summarises the past, guarantees no future return, and only makes sense with positive starting and ending values.
CAGR formula
CAGR is the constant annual rate that, compounded every year, leads from the initial value to the final value.
CAGR
CAGR = (Vf ÷ Vi)^(1/n) − 1
Multiply the result by 100 to express it as a percentage.
Total return
R = Vf ÷ Vi − 1
Overall change across the whole period, without annualisation.
- Vf
- final value
- Vi
- initial value, strictly positive
- n
- duration in years, decimals allowed
Use cases
Compare investments
Put returns earned over different holding periods onto the same compounded annual basis.
Track revenue growth
Measure annualized progress between two fiscal years without confusing total growth with yearly growth.
Analyze audience growth
Compare traffic, subscribers or another metric across multi-year periods using one annual rate.
Examples
Investment grown from €10,000 to €16,105.10 in 5 years
(16,105.10 ÷ 10,000)^(1/5) − 1 = 10% a year. The 61.05% total return is higher than 5 × 10% because gains compound.
Input
Initial value: €10,000; Final value: €16,105.10; Duration: 5 yearsResult
Annual CAGR: 10%; Total return: 61.05%; Absolute change: €6,105.10Tips and best practices
- Use values measured at comparable dates.
- Keep the same unit for the starting and ending values.
- Pair CAGR with yearly data when volatility matters.
Sources and references
Frequently asked questions
Is CAGR the same as ROI?
No. ROI measures the total return over the whole period, while CAGR expresses that evolution as an equivalent compounded annual rate.
Does CAGR mean growth was steady?
No. It is an equivalent annual rate only; the actual yearly changes may have varied substantially between the start and end dates.
Can the duration be decimal?
Yes. A duration such as 2.5 years is valid when it accurately represents the period covered by the starting and ending values.
Does CAGR include dividends?
Only if the entered starting and ending values include them, such as a total-return index.
Can CAGR be negative?
Yes. If the final value is below the initial value, the final ÷ initial ratio is below 1 and the annual rate becomes negative: going from €10,000 to €8,000 in 3 years is about −7.2% per year.
Can the initial value be zero?
No. The formula divides the final value by the initial value, which must be strictly positive. For a project that started from nothing, measure growth from the first year in which the value is meaningful.
Related tools
Keep going with these tools
Tools similar or complementary to this one.
Similar tools
Calculate net present value from an initial investment, future cash flows and a discount rate.
Finance & businessUse this tool
Calculate ROI, net gain and the total cost of an investment.
Finance & businessFeaturedUse this tool
Calculate the revenue and sales volume needed to cover your costs.
Finance & businessUse this tool
Read next
GuideConcepts and technologiesBeginner
ROI calculation: formula and return on investment
Understand the ROI formula, how to interpret it, annualize it and recognize its limits when measuring investment profitability.
27 August 20262 min
GuideConcepts and technologiesIntermediate
NPV, IRR and payback period: evaluate an investment
Understand NPV, IRR and payback period, their differences and limitations, and how to use them together when comparing investment projects.
7 September 20264 min
GuideConcepts and technologiesBeginner
Break-even point: formulas and calculation
Learn how to calculate break-even in units and revenue, contribution margin and the break-even point.
27 August 20261 min
GuideConcepts and technologiesBeginner
Business profitability: margin, break-even point, ROI and EBITDA
Understand what margin, break-even point, ROI and EBITDA measure and when each indicator is useful.
20 September 20263 min