# CAGR Calculator to CalculateCompound Annual Growth Rate

Explains what CAGR is and how it's calculated, and helps you to determine the CAGR from an investment's growth over time.

This free online calculator will calculate the compound annual growth rate (CAGR) given the beginning value of an investment, the ending value, and the number of years that separate the two values.

Plus, the calculated results will also include the step by step process the calculator used to calculate CAGR, along with an annual growth chart showing how the investment would grow if the return rate were fixed over the entered number of years.

If you aren't familiar the CAGR, what it's useful for, or how to calculate it, it may be worth your time to read the explanation provided below before using the calculator.

### What is CAGR?

CAGR is an acronym for Compound Annual Growth Rate, which is a formula used to estimate the annual return rate an investment would need to earn in order to grow from a given beginning value to a given ending value.

### What is CAGR Useful For?

The CAGR calculation is primarily useful for the following three scenarios:

1. When you want to know the average return rate on an investment that fluctuates widely from year to year.
2. When you want to know what annual rate of return you will need to earn in order to achieve a target future value.
3. When you need to forecast the future value of an investment.

### How to Calculate CAGR

When it comes to calculating CAGR, you basically have 3 options: a spreadsheet function, an online calculator like the one on this page, or a handheld calculator capable of raising a base number to a fractional power.

If you are attempting to use a spreadsheet to calculate CAGR (Excel, OpenOffice, etc.), I use the RRI function, which calls for the following inputs:

RRI(nper, pv, fv)

Where
• nper represents the number of periods.
• pv represents the starting or present value of the investment.
• fv represents the ending or future value of the investment.

If you are attempting to calculate CAGR manually using a handheld calculator, here is the formula and an example showing the steps to solving it.

 CAGR Formula FV (1/n) − 1 PV

#1 #2 #3 #4 Example: PV = 1000, FV = 2000, n = 10 (years) Step Explanation Equation Result Divide FV by PV: 2000 ÷ 1000 = 2.00000 Raise Step #2 to the power of 1/n (n = yrs): (2.00000)1/10 = 1.07177 Subtract 1 from Step #2: 1.07177 − 1 = 0.07177 Multiply Step #3 by 100: 0.07177 × 100 = 7.17735 Round Step #4 and add % sign: CAGR = 7.177%

With that, let's use the CAGR Calculator to calculate the rate of return from an investment.

Compound Annual Growth Rate Calculator

Instructions: Enter the beginning investment amount, the ending investment amount, and the number of years between the two.

Next, click the "Calculate CAGR" button and scroll down to see the results.

Mouse over the blue question marks for a further explanation of each entry field. More in-depth explanations can be found in the glossary of terms located beneath the CAGR Calculator.

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Initial investment (\$):
Current or future value of investment (\$):
Number of years:
Compound annual growth rate (CAGR):
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### CAGR Calculator Glossary of Terms

CAGR: Acronym that stands for Compound Annual Growth Rate.

Initial investment: Enter the amount of the initial investment (also referred to as Present Value, or PV).

Current or future value of investment: Enter the current or target future value of the investment.

Number of years: Enter the number of years between the initial investment and the current value or target future value.

Compound annual growth rate (CAGR): Based on your entries, this is the compound annual growth rate of the investment.

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