CAGR Calculator - Calculate Compound Annual Growth Rate Free CAGR Calculator
Enter the initial value, final value and time period to calculate the Compound Annual Growth Rate (CAGR), absolute growth, growth multiple and year-wise breakdown.
Growth Details
CAGR Results
Year-wise Breakdown
| Year | Opening Value | Growth | Closing Value |
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CAGR Calculator - Guide
What is CAGR?
Compound Annual Growth Rate (CAGR) is the mean annual growth rate of an investment over a specified time period longer than one year. It assumes the investment grows at a steady rate each year, even if the actual yearly growth varies. CAGR is widely used to compare the growth of different investments or metrics over time.
CAGR Formula
CAGR = ((Final Value ÷ Initial Value)1/Years − 1) × 100
Example:
- Initial Value = 100,000
- Final Value = 200,000
- Time Period = 5 years
- CAGR = ((200,000 ÷ 100,000)1/5 − 1) × 100 = 14.87%
CAGR vs. Average Return
Unlike a simple average return, CAGR accounts for the compounding effect. An investment that grows 20%, then drops 10%, then grows 15% has different simple average and CAGR values. CAGR tells you the smooth, equivalent annual percentage that takes your initial value to your final value.
Uses of CAGR
- Investment Performance: Compare returns across stocks, mutual funds, or portfolios.
- Business Growth: Track revenue, profit, or user growth over time.
- Goal Setting: Determine the required annual growth rate to reach a target value.
Limitations
- Smoothed Growth: CAGR smooths out volatility and does not reflect actual year-to-year fluctuations.
- Time Horizon: Different start and end points can significantly change the CAGR.
- No Risk Measure: CAGR does not account for investment risk or volatility.