Compound Annual Growth Rate (CAGR) Calculator
Calculate the annualized rate of return on your investment over time
| Detail | Value |
|---|---|
| Beginning Value | - |
| Ending Value | - |
| Investment Period | - |
| Additional Contributions | - |
| Contribution Frequency | - |
| Total Contributions | - |
| Total Growth Amount | - |
| Year | Beginning Value | Contributions | Growth | Ending Value |
|---|
• Comparing investment performance over time
• Evaluating business revenue growth
• Assessing portfolio returns
• Projecting future values
• Comparing different investment options
• Analyzing compound growth scenarios
• Doesn't account for volatility or risk
• Assumes smooth growth (no fluctuations)
• Doesn't reflect cash flows during period
• Can be misleading for short time periods
• Doesn't consider taxes or fees
• Past performance ≠ future results
A Compound Annual Growth Rate (CAGR) Calculator is a financial tool that measures the mean annual growth rate of an investment over a specified period, smoothing out volatility and providing a clear picture of performance. It is widely used to compare investments, business growth, and market trends.
How a CAGR Calculator Works
The CAGR formula calculates the consistent annual growth rate required for an investment to grow from its initial value to its ending value over a given period:
Where:
EV = Ending Value
BV = Beginning Value
n = Number of years
Key Inputs Required
Beginning Value (BV) – Initial investment or revenue.
Ending Value (EV) – Final value after growth.
Time Period (n) – Duration in years.
Outputs Provided by the Calculator
CAGR (%) – Annualized growth rate.
Total Growth (%) – Overall percentage increase from BV to EV.
Comparison Analysis – How the CAGR compares to benchmarks (e.g., stock market returns).
Example Calculation
| Input | Value |
|---|---|
| Beginning Value (BV) | $10,000 |
| Ending Value (EV) | $19,500 |
| Time Period (n) | 5 years |
| Calculations | Results |
| CAGR | 14.3% |
| Total Growth | 95% |
Interpretation:
The investment grew at an average annual rate of 14.3%.
Over 5 years, it nearly doubled (95% total growth).
When Should You Use a CAGR Calculator?
Investment Analysis – Compare stocks, mutual funds, or portfolios.
Business Growth – Track revenue, profit, or user base expansion.
Market Research – Analyze industry trends (e.g., tech, real estate).
Personal Finance – Evaluate savings or retirement account growth.
Limitations of CAGR
Ignores Volatility – Assumes smooth growth (real-world returns fluctuate).
No Cash Flow Consideration – Doesn’t account for deposits/withdrawals.
Misleading for Short Terms – Extreme gains/losses distort annualized rates.