Interactive tool
CAGR calculator
Calculate compound annual growth rate between two values and see the year-by-year path it implies.
What CAGR means
Compound annual growth rate is the single, steady yearly growth rate that would take a starting value to an ending value over a number of years.
CAGR = (ending value ÷ starting value)^(1 ÷ years) − 1
In Excel: =(B2/B1)^(1/B3)-1, or =RRI(B3, B1, B2).
Why CAGR is not the average growth rate
Suppose revenue goes from ₹100 to ₹150 (+50%) and then back to ₹100 (−33.3%). The simple average of the two yearly growth rates is +8.3%, yet revenue ended exactly where it started. The CAGR is 0% — which describes what actually happened. That is why CAGR is the standard way to describe multi-year growth in reports, cases and interviews.
What CAGR hides
CAGR smooths the path. A business that grew 40% one year and shrank 10% the next can have the same CAGR as one that grew steadily. When volatility matters, look at the year-by-year numbers as well.
When the calculator will not give a result
- The starting value must be greater than zero, because growth from zero is undefined.
- The ending value cannot be negative for the same reason.
- The number of years must be greater than zero. It can be a decimal — 2.5 years works.