# CAGR Calculator

> CAGR is the single yearly growth rate that would take a starting value to an ending value over a set number of years if growth were perfectly steady. It smooths out lumpy year-to-year moves so you can compare two investments, or a company’s revenue against its earnings, on one number.

Formula: CAGR = (end / start)^(1 / years) - 1. Example: 100 to 200 over 5 years = 14.9% a year.

## Formula
CAGR = (Ending value ÷ Starting value)1 ÷ Years − 1. The article’s example: $100M to $200M over 5 years is (2)^(1/5) − 1 = 14.9% a year.

## Why CAGR beats a simple average
A simple average adds up yearly returns and divides by the years, which ignores compounding. Gain 50% then lose 50% and the simple average says 0%, but you have lost a quarter of your money. CAGR reports the true start-to-finish result, which is why it is the standard way to quote multi-year growth.

## What counts as a good CAGR
It depends on what is growing. A broad stock index has compounded at roughly 7 to 10% a year over long periods. For a company’s revenue, 15% or more is fast; for its dividend, 8 to 10% is strong. Always compare against the right benchmark and over the same span of years.

## The limits of the number
CAGR hides volatility: two investments with the same CAGR can have had very different rides. It is also only as good as the two endpoints you pick, so avoid starting in a crash or ending on a spike. Pair it with the year-by-year path, which the table above shows.

## FAQ
**How do I calculate CAGR in Excel?** Use =(end/start)^(1/years)-1, or the RRI function: =RRI(years, start, end). Both give the same result as this calculator.

**Can CAGR be negative?** Yes. If the ending value is below the starting value the rate is negative, meaning the investment shrank on average each year.

**Is CAGR the same as annualised return?** For a single lump sum with no cash added or withdrawn, yes. When money moves in and out over time, use a money-weighted return (IRR) instead.

Use the interactive version at https://foliofundamentals.com/tools/cagr-calculator. Related: [What Is CAGR?](https://foliofundamentals.com/blog/what-is-cagr), [Growth metrics](https://foliofundamentals.com/stocks/growth), [DRIP calculator](https://foliofundamentals.com/tools/drip-calculator).