Compute compound annual growth rate from a starting value, an ending value, and a time period in years.
Compound Annual Growth Rate (CAGR) is the average annual growth rate of an investment over a specified period, assuming profits are reinvested. It provides a smoothed-out measure of an investment's return.
The CAGR rate formula is (Ending Value / Starting Value)^(1 / Number of Years) - 1. It calculates the constant annual growth rate of an investment over time. Our cagr rate calculator automates this calculation for you.
A CAGR calculator is most useful for comparing the historical performance of different investments (like stocks, funds, or bonds) over the same time horizon or for evaluating a single investment's past performance.
No. The average annual return is a simple mean and can be misleading because it ignores the effects of compounding. CAGR is more accurate as it represents the investment's true growth over time.
CAGR does not reflect investment volatility. An investment might have a steady CAGR but experience significant price swings from year to year. It is a historical measure and does not predict future returns.
| Cell | Content | Example |
|---|---|---|
| A1 | Starting Value | 1000 |
| A2 | Ending Value | 1500 |
| A3 | Years | 3 |
| A4 | CAGR Result | =RRI(A3,A1,A2) |
=RRI(A3,A1,A2)
=RRI(A3,A1,A2)With the values above: