How to use this calculator
- Beginning value. Enter the value at the start of the period. It must be more than 0.
- Ending value. Enter the value at the end of the period.
- Number of years. Enter the time between the two values. Part years are fine, such as 2.5.
The results show the CAGR, the total growth % over the whole period, the growth multiple (ending value divided by beginning value) and the total gain in dollars. The chart draws a smooth curve from the beginning value to the ending value at the CAGR.
CAGR works for anything measured at two points in time: an investment, sales, profit, users or a price.
Worked example
These are the starting values in the calculator above and the results they give. Change any input to see your own numbers.
- Beginning value
- $10,000
- Ending value
- $18,000
- Number of years
- 5 years
- CAGR
- 12.47%
- Total growth
- 80%
- Growth multiple
- 1.80×
- Total gain
- $8,000
How CAGR is calculated
The calculation has three steps.
- Divide the ending value by the beginning value. This is the growth multiple.
- Raise the multiple to the power of 1 divided by the number of years. This spreads the growth evenly across the years.
- Subtract 1 and express the answer as a percent.
CAGR is not the same as dividing total growth by the number of years. That simple average overstates the yearly rate, because it ignores compounding: each year's growth builds on the year before. If a value doubles, total growth is 100% and the growth multiple is 2, but the CAGR is always less than 100% divided by the years once the period is longer than one year.
CAGR = (EV ÷ BV)^(1 ÷ n) − 1- EV
- ending value
- BV
- beginning value
- n
- number of years
- EV ÷ BV
- growth multiple
- EV − BV
- total gain
How to read the results
CAGR is a smoothed figure. It tells you the constant rate that links the start and end, not what happened in between. The real path may have included strong years and falls. Two investments with the same CAGR can feel very different to hold.
- It depends on the start and end points. Picking an unusually low start or high end makes the rate look better. Check a few different periods.
- It assumes nothing was added or taken out. If money went in or came out along the way, CAGR will be misleading. The IRR calculator handles uneven cash flows.
- It is useful for comparing. Because it is a yearly rate, you can compare growth over different lengths of time on the same footing.
- It can be negative. If the ending value is lower than the beginning value, CAGR shows the yearly rate of decline.
To project a value forward at a given yearly rate, use the future value calculator. For the basics of return measures, read how to calculate ROI.
Frequently asked questions
What does CAGR mean?
CAGR stands for compound annual growth rate. It is the single yearly rate at which a value would have to grow, compounding each year, to get from its beginning value to its ending value over a set number of years. It smooths out the ups and downs into one figure that is easy to compare.
What is the difference between CAGR and average annual return?
An average annual return adds up each year's return and divides by the number of years. CAGR uses only the start and end values and accounts for compounding. When returns vary from year to year, the simple average is higher than the CAGR. CAGR is the better measure of how much the value actually grew.
Is CAGR the same as annualized ROI?
Yes, when there is one amount in at the start and one amount out at the end. Both find the steady yearly rate that links the two values. The names come from different uses. CAGR is common for business figures like sales and for investment values, while annualized ROI is used when talking about a specific investment's return.
Can CAGR be negative?
Yes. If the ending value is below the beginning value, the CAGR is negative and shows the average yearly rate of decline. CAGR cannot be worked out when the beginning value is 0 or negative, because the formula divides by the beginning value. In that case, look at the dollar change instead.
What are the limits of CAGR?
CAGR hides how bumpy the path was, so it says nothing about risk. It is sensitive to the chosen start and end dates. It also assumes no money was added or withdrawn during the period. Use it to compare growth rates, and look at year-by-year figures as well when the route matters.
This calculator gives estimates for education only. It does not know your full situation and is not financial advice. Reviewed and updated November 15, 2026.