Annualized performance
Compound Annual Growth Rate Calculator
Calculate CAGR from a beginning value, ending value, and time period. Compare the annualized rate with total return, simple annual average, a benchmark, and a projected future value if the same rate continued.
CAGR
13.72%
Smoothed annual rate.
Total return
+146.00%
Full-period gain or loss.
Simple average
+20.86%
Total return divided by years.
Benchmark gap
+5.72%
CAGR minus benchmark.
Formula substitution
The calculator uses your actual values in the standard CAGR formula.
CAGR = ($61,500 / $25,000)^(1 / 7) - 1 = 13.72%
| Metric | Value | Use |
|---|---|---|
| CAGR | 13.72% | Compare annualized growth rates. |
| Total return | +146.00% | Measure full-period gain or loss. |
| Simple annual average | +20.86% | Rough arithmetic comparison. |
| Projected value | $116,981 | Extend the same CAGR forward. |
What Is a Compound Annual Growth Rate Calculator?
A compound annual growth rate calculator turns a beginning value, an ending value, and a number of years into one annualized growth rate. It answers the question: what constant yearly rate would have produced the same ending value? That makes CAGR useful for comparing investment accounts, revenue growth, SaaS ARR, property appreciation, or any positive value that changes over a multi-year period.
CAGR is powerful because it smooths the path between the first and last value. That smoothing is also its main limitation. A portfolio can have a clean 9% CAGR and still have experienced large losses in the middle. For decisions where interim cash flows matter, use an IRR or monthly investment style calculator instead.
How to Calculate CAGR
Divide the ending value by the beginning value, raise the result to the power of one divided by the number of years, and subtract one. The calculator then multiplies by 100 to show the result as a percentage.
CAGR = (Ending Value / Beginning Value)^(1 / Years) - 1
Total return is different. It measures the full-period percentage change. Simple annual average divides total return by years. CAGR uses compounding, so it is usually the better number when comparing multi-year growth rates.
Worked Examples
Example 1: Investment portfolio
If a portfolio grows from $25,000 to $61,500 over seven years, the total return is 146%. The CAGR is lower than simply dividing 146% by seven because compounding assumes each year builds on the prior year's value.
Example 2: Revenue growth
If revenue grows from $120,000 to $410,000 over four years, CAGR gives a cleaner annualized growth rate than comparing only the first and last year. It can help compare one business line with another, as long as both use the same time horizon and metric definition.
Frequently Asked Questions
What is CAGR?
CAGR means compound annual growth rate. It is the smoothed annual rate that would take a beginning value to an ending value over a selected number of years if growth happened at a constant annual rate.
How do you calculate compound annual growth rate?
CAGR equals ending value divided by beginning value, raised to the power of one divided by years, minus one. As a formula: CAGR = (Ending Value / Beginning Value)^(1 / Years) - 1.
Is CAGR the same as average annual return?
No. CAGR is a geometric annualized rate. A simple average annual return divides total return by years, which can overstate performance when growth compounds or values move unevenly.
When should I use CAGR?
Use CAGR when comparing growth over multiple years for investments, revenue, SaaS ARR, portfolio values, property values, or business metrics. It is useful when you need one annualized number.
What are the limits of CAGR?
CAGR hides volatility and does not show the path between the first and last values. It also does not handle irregular deposits or withdrawals the way an IRR or XIRR calculation would.
About This Calculator
Use this compound annual growth rate calculator to find CAGR, total return, annual average, benchmark gap, and projected value from start and end values.
Frequently Asked Questions
What is CAGR?
CAGR means compound annual growth rate. It is the smoothed annual rate that would take a beginning value to an ending value over a selected number of years if growth happened at a constant annual rate.
How do you calculate compound annual growth rate?
CAGR equals ending value divided by beginning value, raised to the power of one divided by years, minus one. Formula: CAGR = (Ending Value / Beginning Value)^(1 / Years) - 1.
Is CAGR the same as average annual return?
No. CAGR is a geometric annualized rate. A simple average annual return divides total return by years, which can overstate performance when growth compounds or values move unevenly.
When should I use CAGR?
Use CAGR when comparing growth over multiple years for investments, revenue, SaaS ARR, portfolio values, property values, or business metrics. It is useful when you need one annualized number.
What are the limits of CAGR?
CAGR hides volatility and does not show the path between the first and last values. It also does not handle irregular deposits or withdrawals the way an IRR or XIRR calculation would.
Can CAGR be negative?
Yes. If the ending value is lower than the beginning value and both values are positive, CAGR will be negative. A negative CAGR means the value declined on a smoothed annual basis.
Why can two investments have the same CAGR but different risk?
CAGR only uses beginning value, ending value, and time. Two investments can end at the same value with the same CAGR while one had a smooth path and the other had deep drawdowns.
Should I use CAGR for monthly deposits?
Usually no. If you are adding money every month, use a monthly investment calculator or IRR-style calculation. CAGR is best when comparing a beginning value and ending value without major interim cash flows.
AC
Alex ChenSenior Financial Analyst
Alex specializes in personal finance modeling with experience in investment analysis and tax optimization. He ensures every financial calculator follows current IRS guidelines and industry-standard formulas.
- CFA Level II Candidate
- B.S. in Finance, University of Michigan
- 8 years in financial planning tools