CAGR stands for Compound Annual Growth Rate. It is the annual growth rate that would take a starting value to an ending value over a number of years, assuming growth compounds each year at the same rate.

How do I calculate CAGR?

CAGR = ((End Value / Start Value) ^ (1 / Years)) - 1. Multiply by 100 to express as a percentage. Example: from 10,000 to 16,105 over 5 years = (16105/10000)^(1/5) - 1 = 10% CAGR.

What is a good CAGR for an investment?

There is no universal benchmark, but a 7-10% CAGR is commonly cited as a reasonable long-term expectation for diversified equity portfolios. For individual stocks or businesses, higher CAGRs are possible but typically involve more risk.

Is CAGR the same as average annual growth rate?

No. CAGR is not the same as the simple average of year-on-year growth rates. CAGR is a geometric mean that accounts for compounding. It represents a single steady rate that would produce the same final result as the actual growth path.

CAGR Calculator – Annual Percentage Growth Rate

CAGR Calculator

Find the annual growth rate of any investment, revenue, or value over time. Enter three numbers and get the answer.

Starting Value

Value at the beginning

Enter a valid starting value greater than 0.

Ending Value

Value at the end

Enter a valid ending value.

Number of Years

Years between start and end

Enter a valid number of years (greater than 0).

Annual Growth Rate (CAGR)

per year, compounded annually

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CAGR

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Total Growth

–

Multiplier

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How It Works

CAGR (Compound Annual Growth Rate) answers a simple question: if a value grew from X to Y over N years, what was the steady annual rate that would produce that same result? It smooths out the bumps in year-on-year growth and gives you one clean number you can compare, report, and make decisions with.

CAGR = ((End Value / Start Value) ^ (1 / Years)) – 1

Example: 10,000 to 16,105 over 5 years = (16105/10000)^(0.2) – 1 = 0.10 = 10% per year

The “^” means “to the power of.” The 1/Years part is what makes it a geometric average rather than a simple one. The calculator handles all of this. You just enter the three numbers.

When People Actually Use This

Investment performance

You invested $10,000 five years ago and it’s now worth $16,105. What was your annual return? 10% CAGR. Without this calculation, you might say “it went up $6,105” or “it grew 61%,” neither of which tells you how that compares to a savings account, a fund, or another investment over the same period. CAGR is the standard metric for this comparison.

Business revenue growth

A company had revenue of $2.4 million three years ago and $3.8 million last year. What was their annual revenue growth rate? CAGR = (3.8/2.4)^(1/3) – 1 = 16.6%. This is the number that goes on investor pitch decks, board reports, and funding applications. Using the total growth (58.3%) without the annual rate would be misleading for anything over one year.

Comparing two investments over different timeframes

Investment A doubled in 6 years. Investment B tripled in 10 years. Which grew faster annually? CAGR of A: 12.25% per year. CAGR of B: 11.61% per year. Investment A had slightly faster annual growth even though Investment B produced a larger total multiple. CAGR makes these comparable.

Salary and career earnings growth

You earned $42,000 eight years ago and earn $74,000 now. Your salary CAGR is 7.3% per year. That number tells you whether your earnings kept pace with inflation (roughly 3-4% per year) or significantly outpaced it. It also helps you benchmark against industry averages.

Population, user, or customer growth

A product had 5,000 users at launch four years ago and has 48,000 users today. The CAGR is 75.9%. Marketing teams, investors, and product managers use this to describe growth in a single credible number for presentations and reports.

Quick tip If your ending value is less than your starting value, CAGR will be negative. That means the value declined on average each year. This is a valid and useful result. For example, a product that went from 10,000 users to 4,000 users over 3 years has a CAGR of -26.3%, which tells you the rate of decline clearly.

CAGR vs Average Annual Growth Rate

Why CAGR is more accurate than a simple average If a value goes up 100% in year 1 and down 50% in year 2, the simple average annual growth is 25%. But the actual end value is the same as the start. CAGR would correctly show 0%. CAGR accounts for compounding; the simple average does not. For any period longer than one year, CAGR is the more accurate and honest measure.

Table of Truth: Common CAGR Examples

Use this table to sanity-check your result or benchmark your numbers quickly.

Start	End	Years	CAGR	Context
10,000	16,105	5	10.00%	Investment
10,000	20,000	10	7.18%	Doubled in 10 yrs
5,000	48,000	4	75.92%	User growth
50,000	72,000	3	12.93%	Revenue
42,000	74,000	8	7.32%	Salary
100	100	5	0.00%	No growth
1,000	500	3	-20.63%	Decline
1,200	900	2	-13.40%	Decline
100,000	250,000	7	13.99%	Portfolio
2,400,000	3,800,000	3	16.58%	Business revenue

Common Mistakes People Make

Mistake 1: Dividing total growth by number of years If something grew 60% over 5 years, the simple division gives 12% per year. But that’s wrong. The CAGR accounts for compounding and is approximately 9.86% per year. Dividing total growth by years ignores the fact that each year’s growth builds on all previous years.

Mistake 2: Starting value of zero CAGR cannot be calculated when the starting value is zero. You would be dividing by zero. If you’re measuring growth from zero users or zero revenue, CAGR doesn’t apply. Use absolute numbers instead until you have a meaningful starting base.

Mistake 3: Treating CAGR as a guaranteed future rate CAGR describes what happened in the past. It does not predict the future. A 15% historical CAGR does not mean future growth will be 15% per year. It is a description of past performance, not a forecast.

Frequently Asked Questions

What does CAGR mean?

CAGR stands for Compound Annual Growth Rate. It is the consistent annual rate at which a value would have had to grow to get from the starting point to the ending point, assuming growth compounds year over year.

How is CAGR calculated?

CAGR = ((End Value / Start Value) ^ (1 / Years)) – 1. Multiply the result by 100 to express as a percentage. This calculator does all the math for you.

What is a good CAGR?

It depends on the context. For a diversified investment portfolio, 7-10% is generally considered strong. For a fast-growing startup, 50-100% or higher might be expected. For inflation, 2-4% is typical in most economies. Compare CAGR against the relevant benchmark for your specific situation.

Can CAGR be negative?

Yes. If the ending value is lower than the starting value, CAGR will be negative. It tells you the average annual rate of decline. This is useful for understanding how quickly something is shrinking.

Is CAGR the same as annual return?

In practice, yes, they describe the same concept: the consistent annual rate of growth. The term “annual return” is more commonly used in investment contexts, while CAGR is used more broadly for business and economic metrics.

Is this calculator free?

Yes. No signup, no login, no data collected. Enter your numbers and get your result.