How cagr calculator works
Compound Annual Growth Rate (CAGR) is the constant year-over-year rate that would grow an initial value into a final value over a given number of years. The formula is CAGR = (finalValue / initialValue)^(1 / years) - 1. It smooths out volatility into a single steady-growth number, so a $1,000 investment that becomes $2,000 in 5 years has a CAGR of about 14.87%.
Enter the beginning value, the ending value, and the number of years. The calculator returns the CAGR as a percentage, the total return over the full period, the growth multiple (ending divided by beginning), and a year-by-year projected balance assuming the value compounds at the constant CAGR.
CAGR describes the smoothed growth rate only — it hides the path volatility in between. An investment that doubles smoothly and one that doubles after a 60% drawdown share the same CAGR. Use it as a comparability yardstick, not a forecast. All math runs in your browser.
Frequently asked questions
What is the CAGR formula?
CAGR = (finalValue / initialValue) raised to the power of (1 / years), minus 1. For $1,000 growing to $2,000 over 5 years: (2000/1000)^(1/5) - 1 = 2^0.2 - 1, about 14.87% per year.
Can years be fractional?
Yes. Years can be any positive number, including fractions like 3.5. The year-by-year schedule lists each whole year plus the final fractional point so the last row always matches your ending value.
Does CAGR account for cash flows during the period?
No. CAGR assumes a single beginning and ending value with no deposits or withdrawals in between. If you added or withdrew money, use a time-weighted or internal-rate-of-return measure instead; CAGR would over- or under-state the true growth.
How is CAGR different from average annual return?
A simple average of yearly returns can overstate growth because it ignores compounding. CAGR is the geometric mean, so it always reproduces the exact ending value when applied as a constant rate — that is why it is the standard for comparing investments held over different periods.
