How to use
- Choose Growth rate (CAGR) to find the rate, or Ending value to project forward.
- Enter the starting value and the number of years. Use decimals for part years: 18 months is 1.5.
- Enter the ending value, or the growth rate if you are projecting.
- Read the CAGR, the total growth and the year-by-year path.
CAGR formula
CAGR = (ending value ÷ starting value)^(1 ÷ years) − 1
Ending value = starting value × (1 + CAGR)^years
CAGR is the one steady yearly rate that turns the starting value into the ending value. It works for investments, revenue, prices or anything else that grows.
Examples
₹10,000 grows to ₹20,000 in 7 years:
- 20,000 ÷ 10,000 = 2
- 2^(1 ÷ 7) − 1 = 0.1041
- CAGR = 10.41% a year
A share bought at $79.30 and sold at $224.59 five years later grew at 23.15% a year. This example is from OpenStax’s finance textbook.
Projecting: 10,000 growing at 10% a year for 7 years reaches 19,487.17.
CAGR for common growth multiples
| Growth | Over 5 years | Over 10 years | Over 20 years |
|---|---|---|---|
| Up 50% (×1.5) | 8.45% | 4.14% | 2.05% |
| Doubled (×2) | 14.87% | 7.18% | 3.53% |
| Tripled (×3) | 24.57% | 11.61% | 5.65% |
| Halved (×0.5) | −12.94% | −6.7% | −3.41% |
CAGR vs average return
The simple average of yearly returns overstates growth, because it ignores compounding.
- Returns of +12%, −8% and +2% average 2% a year.
- The value actually grew at a CAGR of 1.67% a year.
CAGR answers “what steady rate would give the same result?”. It hides the ups and downs along the way.
Negative values and short periods
The starting value must be above zero. An ending value of zero gives a CAGR of −100%.
For periods under a year, CAGR assumes the same growth repeats for a full year. A 10% gain in 6 months becomes a 21% CAGR, so treat short-period figures with care.
Know the money you put in and got back? The ROI calculator gives the total return and its yearly equivalent.