CAGR Calculator

CAGR is the smoothed yearly growth rate that takes a value from start to end — the standard way to compare investments.

How the CAGR Calculator works

The CAGR Calculator solves for the single, smoothed annual growth rate that turns a starting value into an ending value over a defined number of years. The closed-form CAGR calculation formula is CAGR = (EV / BV)^{(1 / n)} − 1, where EV is the ending value, BV is the beginning value, and n is the number of compounding periods measured in years. The result is expressed as a decimal, which the calculator converts to a percentage by multiplying by 100.

Internally, the tool runs four steps. First, it validates inputs: BV must be positive, EV must be non-negative, and n must be greater than zero. Second, it computes the ratio EV/BV, which represents the total growth multiple over the holding period. Third, it raises that ratio to the power of 1/n using natural logarithms (CAGR = e^ln(EV/BV)/n − 1) for numerical stability across long horizons. Fourth, it subtracts 1 and rounds to two decimals.

For a reverse CAGR calculator workflow, the same engine is rearranged to solve for the future value when you supply BV, n, and a target rate r: EV = BV × (1 + r)ⁿ. This is how the calculator projects, for example, what $25,000 grows to at a 10% CAGR over 15 years.

Edge cases matter. If BV equals zero, CAGR is mathematically undefined because the ratio explodes. If EV is zero, CAGR equals −100% regardless of period length. If EV is less than BV, CAGR is negative and represents a compound annual loss. If the holding period is a fraction of a year, such as 3.5 years, the calculator accepts decimal n and still returns a valid annualized rate.

The tool optionally accepts intermediate contributions or withdrawals for a money-weighted view, but pure CAGR ignores cash flows because it is, by definition, a time-weighted measure between two endpoints. When contributions are added, the calculator switches to an internal rate of return (IRR) approximation rather than reporting CAGR.

To calculate CAGR in Excel using the same logic, the formula is =(EV/BV)^(1/n)-1 or =RRI(n, BV, EV), which is Excel's native equivalent rate function. Google Sheets supports both. The CAGR calculator online version simply automates that arithmetic, validates inputs, and surfaces edge cases that spreadsheets silently allow, such as zero or negative beginning values that produce misleading outputs.

Example calculation

Three worked CAGR calculation scenarios show how the calculator handles different real-world cases. Each uses the formula CAGR = (EV/BV)^(1/n) − 1.

Scenario 1: A 5-year index fund position. You invested $20,000 in a broad-market ETF five years ago. Today the position is worth $32,210. Plugging in: (32,210 / 20,000)^(1/5) − 1 = (1.6105)^0.2 − 1 = 1.10000 − 1 = 10.00%. The CAGR 5 years figure is 10.00%, even though the actual annual returns were lumpy: +28%, −12%, +18%, +22%, and −2%. The calculator collapses that volatility into one smoothed number for fair comparison.

Scenario 2: A small business valuation over 8 years. Revenue grew from $480,000 to $1,275,000. (1,275,000 / 480,000)^(1/8) − 1 = (2.6563)^0.125 − 1 = 1.1295 − 1 = 12.95% CAGR. That single rate lets you benchmark the business against an S&P 500 CAGR of roughly 10% over the same window.

Scenario 3: A losing position. A $50,000 crypto allocation is now worth $31,000 after 3 years. (31,000 / 50,000)^(1/3) − 1 = (0.62)^0.3333 − 1 = 0.8527 − 1 = −14.73% CAGR. Negative CAGR is mathematically valid and tells you the position compounded losses at roughly 14.7% per year.

Scenario	Beginning value	Ending value	Years	Total return	CAGR
Index fund	$20,000	$32,210	5	+61.05%	10.00%
Small business	$480,000	$1,275,000	8	+165.63%	12.95%
Crypto position	$50,000	$31,000	3	−38.00%	−14.73%

Notice that total return alone is misleading. The 165.63% return on the business looks larger than the index fund's 61.05%, but on an annualized basis the business only outperformed by about 3 percentage points per year. CAGR normalizes results across different holding periods, which is exactly why analysts, fund managers, and the SEC use it for standardized performance reporting.

Tips for using the CAGR Calculator

• Always use the same currency for both beginning and ending values. Converting a foreign-currency portfolio at today's FX rate while leaving the starting value in original currency inflates or deflates CAGR by the exchange-rate move, not the actual underlying growth.
• For periods shorter than one year, annualize cautiously. A 6-month return of 8% does not automatically mean 16% CAGR; the correct annualization is (1.08)² − 1 = 16.64%, and short windows are statistically unreliable predictors.
• When comparing investments, match the time horizons exactly. A 10-year CAGR of 9% and a 3-year CAGR of 14% are not directly comparable because the shorter window over-weights a single market cycle rather than capturing a full sequence of returns.
• Distinguish nominal CAGR from real CAGR. Subtract the average annual inflation rate to get real CAGR: if nominal is 8% and inflation averaged 3%, your purchasing-power growth is closer to 4.85%, not 5%, because (1.08/1.03) − 1 = 4.85%.
• Treat dividends and distributions explicitly. A CAGR calculator with dividends should use total return values (price plus reinvested distributions) for ending value, otherwise you understate true compounded growth for dividend-heavy holdings like REITs or utilities.
• Use reverse CAGR to set savings targets. If you need $500,000 in 18 years from $50,000 today, solve for r: (500,000/50,000)^(1/18) − 1 = 13.65% required CAGR, which immediately tells you whether the goal is realistic.
• Watch for survivorship bias in benchmark CAGRs. Published mutual-fund category CAGRs exclude funds that closed or merged, often overstating long-run returns by 1 to 2 percentage points annually.
• Never apply CAGR to volatile assets as a forecasting tool. A 20% historical CAGR over a single bull market does not project forward; geometric mean returns regress meaningfully over longer windows, especially after drawdowns.
• Cross-check CAGR with standard deviation. Two assets with identical 10% CAGRs but standard deviations of 6% versus 22% are radically different risk propositions, and CAGR alone hides that gap.
• Use logarithms for very long horizons. For 50+ year periods, computing (EV/BV)^(1/n) directly can introduce floating-point error; the equivalent ln(EV/BV)/n approach is more numerically stable in spreadsheets and code.

The math behind CAGR and where the formula comes from

CAGR is the geometric mean of annual growth factors minus one, which is why it always understates the arithmetic average return for any volatile series. The full derivation starts from compound interest: EV = BV × (1 + r)ⁿ. Solving for r gives r = (EV/BV)^(1/n) − 1, which is the CAGR calculation formula every CAGR calculator excel formula implements.

The reason CAGR uses a geometric mean rather than an arithmetic mean is that returns compound multiplicatively, not additively. If a $100 portfolio gains 50% then loses 50%, the arithmetic mean is 0%, but you end with $75. The geometric mean correctly reports (75/100)^(1/2) − 1 = −13.4% per year, capturing the real damage of volatility.

This gap between arithmetic and geometric means is called volatility drag, and it scales with variance. The approximation is geometric ≈ arithmetic − (variance / 2). For an asset with 10% arithmetic mean and 20% standard deviation, expected CAGR is roughly 10% − (0.20²/2) = 8%, which is why high-variance assets need higher average returns to match low-variance ones.

Common misconceptions about CAGR that even pros get wrong

CAGR is not an average annual return, not a guarantee of future performance, and not a measure of risk. It is one specific calculation: the constant rate that links two endpoints over a stated period. Misreading CAGR as something more causes real money mistakes.

First, CAGR is path-independent. A fund that returned +40%, −30%, and +10% has the same CAGR as a fund that returned +5%, +5%, and +5% if both endpoints match, even though one experience is far more stressful to live through. CAGR hides sequence-of-returns risk entirely.

Second, CAGR is sensitive to start and end dates. A 10-year CAGR ending in March 2020 looks dramatically different from one ending in March 2021, even though only twelve months separate them. Always check whether a reported CAGR cherry-picks favorable endpoints, particularly in marketing materials.

Third, CAGR over short windows is statistically unreliable. Three-year CAGRs for stocks can swing by 20 percentage points based on starting month alone. Treat any CAGR under five years as a description of the past, not a projection.

CAGR vs average return and IRR: when to use each

CAGR, average annual return, and IRR each answer a different question. Use CAGR when comparing two endpoints with no interim cash flows. Use IRR when contributions or withdrawals occur during the holding period. Use average return only when you specifically want the arithmetic mean of yearly results.

The cagr vs average return distinction matters for portfolio reporting. SEC rules require mutual funds to report standardized average annual total returns, which are CAGRs, not arithmetic averages, precisely because arithmetic averages overstate true compound growth.

IRR generalizes CAGR. When you contribute monthly to a 401(k), CAGR cannot describe your portfolio because money entered at different times. IRR finds the single discount rate that sets the net present value of all cash flows to zero, which is the correct apples-to-apples figure for any cash-flow stream. Our investment calculator uses IRR-style logic when contributions are involved, while the CAGR calculator sticks to the pure two-endpoint definition.

How to calculate CAGR in Excel, Google Sheets, and Python

The fastest way to calculate CAGR in Excel is the RRI function: =RRI(years, beginning_value, ending_value). For $10,000 to $18,500 over 7 years, =RRI(7, 10000, 18500) returns 9.20%. The manual cagr calculation in excel without RRI uses =(C2/B2)^(1/A2)-1 where A2, B2, C2 hold years, BV, and EV.

For Google Sheets, both formulas work identically. For numerical stability over long periods, the logarithmic form =EXP(LN(C2/B2)/A2)-1 avoids precision loss past 30 years.

In Python: cagr = (ev / bv) ** (1 / n) - 1. For pandas dataframes computing rolling CAGRs across many windows, df['cagr'] = (df['end'] / df['start']).pow(1 / df['years']) - 1 vectorizes the calculation across thousands of rows.

The cagr calculation excel formula and the cagr calculator excel approach both share one weakness: neither validates that BV is positive or that n is greater than zero, so you can silently produce nonsense for distressed assets. The online calculator on this page enforces those guards before returning a result.

Advanced use cases: revenue forecasting, ROIC, and equity research

Equity analysts use CAGR for top-line growth, free cash flow growth, and dividend growth rate inputs to discounted cash flow models. A company posting $500M revenue today with a 5-year forward revenue CAGR of 12% projects to $881M in year five, which becomes a key DCF input.

For SaaS valuation, the Rule of 40 combines revenue growth (often expressed as forward CAGR) with operating margin, with 40+ considered investable. CAGR also feeds reverse-DCF exercises: given today's stock price, what implied earnings CAGR justifies it?

In private equity and venture, the difference between gross and net CAGR matters enormously. A fund reporting 25% gross CAGR can deliver 18 to 20% net to LPs after the 2-and-20 fee structure compounds over a decade. Always confirm whether a quoted CAGR is gross or net of fees, and over what specific vintage years.

For real estate, capitalization rate and CAGR answer different questions: cap rate measures current income yield, while CAGR measures total appreciation. A property with a 5% cap rate and 4% annual price appreciation delivers roughly 9% total CAGR before financing leverage.

Mistakes and pitfalls when calculating CAGR

The five most common CAGR mistakes are: using nominal instead of total returns, ignoring fees and taxes, mismatched time periods, currency drift, and applying CAGR to non-compounding processes. Each silently corrupts the output by 1 to 5 percentage points.

Forgetting dividends understates real CAGR for income-heavy assets by 1.5 to 3% per year. Ignoring expense ratios overstates fund CAGR by 0.5 to 1.5% over long horizons. A 1% annual fee over 30 years consumes roughly 26% of terminal wealth, which the gross-return CAGR conceals.

Mixing fiscal-year and calendar-year endpoints introduces phantom growth or shrinkage. Annualizing a partial year by multiplying instead of compounding overstates short-period CAGRs by 4 to 8%. Applying CAGR to linear processes like depreciation or amortization is conceptually wrong because those decline arithmetically, not geometrically.

Finally, treating CAGR as a forecast invites disappointment. A 15-year historical CAGR for any single stock has roughly zero predictive power for the next 15 years. Use CAGR to describe history; use scenario models for the future.

CAGR for $10,000 Growing to Various Ending Values Over 5 Years

This table shows the compound annual growth rate when $10,000 grows to several common ending values over a 5-year period. Each CAGR is calculated with the formula (Ending Value / 10,000)^(1/5) − 1, then expressed as a percentage. Notice how total growth and annualized CAGR diverge: doubling your money (100% total growth) is only about 14.87% per year because returns compound.

Ending value	Total growth	CAGR
$12,000	+20.00%	3.71%
$15,000	+50.00%	8.45%
$16,105	+61.05%	10.00%
$20,000	+100.00%	14.87%
$25,000	+150.00%	20.11%

To run your own beginning value, ending value, and time horizon, use the CAGR Calculator at the top of this page, which recomputes the annualized rate instantly and handles decimal years and negative outcomes.

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investment calculator with contributions · compound interest calculator · future value calculator · present value calculator · Rule of 72 calculator · ROI calculator · SIP calculator · inflation calculator · full guide on how to calculate CAGR · what is compound interest

For a related deep dive, see Investopedia's full CAGR definition.

CAGR Calculator — frequently asked questions

Why use CAGR?

It removes volatility noise and expresses growth as one consistent annual rate.

Does it show risk?

No — CAGR ignores year-to-year swings, so pair it with a volatility measure.

Why use CAGR instead of average return?

Averages overstate growth; CAGR reflects actual compounded performance.

How do you calculate CAGR step by step?

To calculate CAGR, divide the ending value by the beginning value, raise that result to the power of 1 divided by the number of years, and subtract 1. The full formula is CAGR = (EV/BV)^(1/n) − 1. For example, if $5,000 grew to $9,000 over 6 years, the cagr calculation is (9000/5000)^(1/6) − 1 = 1.1247 − 1 = 12.47%. Express as a percentage by multiplying by 100. This is the same logic every cagr calculator online uses internally.

How to calculate CAGR in Excel using a formula?

To calculate cagr in excel, use either =RRI(years, BV, EV) or the manual cagr calculation excel formula =(EV/BV)^(1/years)-1. For a portfolio that grew from $25,000 to $48,000 over 9 years, =RRI(9,25000,48000) returns 7.51%. Google Sheets supports both formulas identically. The RRI function is technically Excel's native equivalent-rate calculator and produces the same result as the manual cagr calculation in excel, with cleaner syntax for spreadsheet templates.

What is the CAGR formula and how is CAGR calculated?

The cagr formula calculator implementation is CAGR = (Ending Value / Beginning Value)^(1/n) − 1, where n is the number of years. CAGR is calculated by finding the constant compound rate that bridges two endpoints, expressed as the geometric mean of annual growth factors minus one. This single number smooths out year-to-year volatility into one annualized figure, which is why the compound annual growth rate calculator is the standard way to compare investment performance across different holding periods.

How does a reverse CAGR calculator work?

A reverse CAGR calculator solves for the future value when you know the beginning value, growth rate, and number of years. The formula rearranges to EV = BV × (1 + r)ⁿ. For example, $30,000 growing at 8% CAGR for 20 years projects to 30,000 × 1.08²⁰ = $139,829. Reverse CAGR is useful for retirement planning, savings goals, and scenario modeling. Our <a href="/future-value-calculator/">future value calculator</a> handles the same logic with optional periodic contributions.

What is the difference between CAGR and average annual return?

CAGR is the geometric mean compound rate between two endpoints, while average annual return is the simple arithmetic mean of yearly returns. The cagr vs average return gap widens with volatility. A portfolio that returns +50%, −30%, +20% has an arithmetic average of 13.3% but a CAGR of only 8.4%, because losses compound differently than gains. CAGR is the honest measure of investment growth; arithmetic average overstates real outcomes whenever returns vary year to year.

How to calculate CAGR for 5 years specifically?

For cagr 5 years, the formula is (EV/BV)^(1/5) − 1, or equivalently (EV/BV)^0.2 − 1. If an investment grew from $15,000 to $24,500 over five years, the calculation is (24,500/15,000)^0.2 − 1 = (1.6333)^0.2 − 1 = 1.1027 − 1 = 10.27%. Five-year CAGR is the most commonly cited window in fund factsheets because it typically captures a partial market cycle while remaining responsive to recent performance changes.

Can CAGR be negative, and what does that mean?

Yes, CAGR is negative whenever the ending value is less than the beginning value. A negative CAGR represents the compound annual rate of loss. For example, $40,000 falling to $28,000 over 4 years produces a CAGR of (28,000/40,000)^(1/4) − 1 = −8.52%. The calculator handles negative outcomes correctly, but CAGR is mathematically undefined when the beginning value is zero or negative, because the ratio EV/BV becomes meaningless or sign-flipping.

How do you calculate CAGR with dividends or distributions?

For a cagr calculator with dividends, use total return values rather than price-only values. Add the cumulative reinvested dividend value to the ending price before applying the formula. If a stock went from $100 to $145 over 7 years plus paid $32 in reinvested dividends, ending value is $177, not $145. CAGR becomes (177/100)^(1/7) − 1 = 8.49% instead of the price-only 5.45%. Total-return CAGR is the apples-to-apples figure for income assets.

How to handle CAGR when there are regular contributions?

Pure CAGR cannot handle contributions because it is, by definition, a two-endpoint measure. For a cagr calculator with contributions, you need internal rate of return (IRR) instead. IRR finds the single discount rate that sets the net present value of all cash flows to zero. In Excel, use =XIRR(values, dates). For monthly 401(k) contributions over 20 years, IRR is the correct annualized return; reporting it as CAGR is technically incorrect, though many tools blur the distinction.

Is CAGR a reliable predictor of future returns?

No, CAGR is a descriptive backward-looking statistic, not a forecast. Historical CAGR has weak predictive power for future returns, especially over short windows. A 5-year CAGR can swing dramatically based on the starting month chosen. Long-term historical asset class CAGRs, such as the roughly 10% US equity CAGR since 1928, are useful benchmarks for planning ranges but should never be projected as guaranteed returns. Combine CAGR with standard deviation and scenario analysis for honest planning.

How is CAGR used to compare investments across different time periods?

CAGR normalizes returns across different holding periods, making it the standard for cross-comparison. A 3-year investment that returned 50% total looks worse than a 10-year investment that returned 120% in raw terms, but their CAGRs are 14.47% and 8.20% respectively, revealing the 3-year option was actually higher-growth annualized. This is exactly why fund families report 1, 3, 5, and 10-year annualized returns rather than cumulative totals, and why the compound annual growth rate calculator is essential for fair comparison.

What is a good CAGR for stock investments?

For US stocks, a long-term CAGR of 8 to 10% is consistent with historical averages after inflation adjustment of roughly 6 to 7% real return. CAGRs above 15% over 10+ years are statistically rare and usually indicate concentration risk or favorable endpoint timing. For diversified portfolios, target a 7 to 9% nominal long-run CAGR for planning purposes. Higher targets require higher allocations to equities, which means accepting larger interim drawdowns of 30 to 50%.

How do you calculate CAGR for a partial year?

For a fractional period, use decimal years in the formula. If an investment grew from $10,000 to $11,800 over 2.5 years, the calculation is (11,800/10,000)^(1/2.5) − 1 = (1.18)^0.4 − 1 = 6.78%. The calculator accepts decimal n values directly. Be cautious annualizing very short periods (under one year): a 3-month return is statistically noisy when scaled to a yearly rate, and projecting forward from such short windows is unreliable.

Why does CAGR differ from total return?

Total return measures cumulative growth over the entire period without annualizing, while CAGR converts that cumulative growth into a constant annual rate. A total return of 100% over 10 years equals a CAGR of 7.18%, not 10%, because compounding rather than addition links the years. The relationship is: Total Return = (1 + CAGR)ⁿ − 1. Understanding this distinction prevents the common mistake of dividing total return by years to estimate annual performance.

How accurate is an online CAGR calculator versus manual Excel?

A cagr calculator online and a properly written cagr calculation excel formula produce identical results to the precision of the underlying floating-point arithmetic, typically 8 to 15 decimal places. The advantages of the online version are input validation (rejecting zero or negative beginning values), edge-case handling, and immediate result display without spreadsheet setup. For repeat analysis across many scenarios, however, an Excel template using =RRI() is faster, while one-off calculations are quicker on a dedicated calculator page.

How do I calculate a 2-year CAGR?

For a 2-year CAGR, use (EV/BV)^(1/2) − 1, which is the same as taking the square root of the growth multiple and subtracting 1. If $10,000 grew to $14,400 over two years, the calculation is (14,400/10,000)^0.5 − 1 = 1.20 − 1 = 20.00%. Two-year windows are short, so treat the result as a description of the past rather than a forecast.

How do you calculate a 3-year CAGR?

A 3-year CAGR uses (EV/BV)^(1/3) − 1, the cube root of the growth multiple minus 1. For example, $8,000 growing to $15,000 over three years gives (15,000/8,000)^(1/3) − 1 = (1.875)^0.3333 − 1 = 23.31%. Three-year CAGR is common in fund factsheets, but it can swing widely depending on the exact start and end dates you choose.

How do I calculate a 10-year CAGR?

For a 10-year CAGR, apply (EV/BV)^(1/10) − 1, taking the tenth root of the growth multiple. If $10,000 grew to $25,000 over ten years, the result is (25,000/10,000)^0.1 − 1 = (2.5)^0.1 − 1 = 9.60%. Ten-year CAGR is the gold-standard long-term window because it usually captures a full market cycle and smooths out short-term volatility.

How do I use the RRI function in Excel for CAGR?

Use =RRI(n, BV, EV), where n is the number of years, BV is the beginning value, and EV is the ending value. For $12,000 growing to $20,000 over 6 years, =RRI(6,12000,20000) returns 8.89%. RRI is Excel's native equivalent-rate function and produces exactly the same answer as the manual formula =(20000/12000)^(1/6)-1, just with cleaner syntax.

How do I calculate CAGR in Google Sheets?

In Google Sheets, type =(EV/BV)^(1/n)-1 or use =RRI(n, BV, EV); both work identically to Excel. For $7,500 growing to $13,000 over 4 years, =(13000/7500)^(1/4)-1 returns 14.74%. For very long horizons, the logarithmic form =EXP(LN(EV/BV)/n)-1 avoids floating-point precision loss past about 30 years and gives the same result.

How do I calculate CAGR in Python?

In Python, the one-liner is cagr = (ev / bv) ** (1 / n) - 1. For $1,000 growing to $2,500 over 8 years, (2500/1000) ** (1/8) - 1 returns 0.12135, or 12.14%. For pandas dataframes, vectorize it as df['cagr'] = (df['end'] / df['start']).pow(1 / df['years']) - 1 to compute thousands of rolling windows at once.

How do I calculate CAGR by hand without a calculator?

To calculate CAGR by hand, divide ending value by beginning value, take the n-th root, then subtract 1. The n-th root equals raising to the power 1/n. For $100 growing to $200 over 5 years: 200/100 = 2, then 2^(1/5) = 1.1487, minus 1 = 14.87%. Without a scientific calculator, use logarithms: CAGR = antilog(log(2)/5) − 1.

How do I calculate CAGR on a BA II Plus financial calculator?

On a BA II Plus, use the TVM keys: enter the beginning value as PV (negative), the ending value as FV, the years as N, set PMT to 0, then press CPT I/Y. For $10,000 to $18,000 over 6 years, enter N=6, PV=-10000, FV=18000, CPT I/Y returns 10.29%. The HP 12c uses the same i-solve approach with its own n, PV, FV keys.

How do I find CAGR from a total return percentage?

Convert total return to CAGR with (1 + total return)^(1/n) − 1. A total return of 80% over 6 years is not 13.3% per year; it equals (1.80)^(1/6) − 1 = 10.29% CAGR. Dividing total return by years overstates the annual rate because returns compound multiplicatively. Always use the n-th root method, never simple division, to annualize cumulative growth.

How do I calculate CAGR from a series of annual growth rates?

When you have yearly growth rates instead of two endpoints, take the geometric mean: multiply each (1 + rate) together, raise the product to 1 divided by the number of years, then subtract 1. For rates of +10%, +20%, −5%, +15%, the product is 1.4421, so CAGR = 1.4421^(1/4) − 1 = 9.58%. Never simply average the rates; that arithmetic mean overstates compound growth.

How do I convert annual CAGR to a monthly or quarterly rate?

To convert annual CAGR to a monthly rate, use (1 + annual)^(1/12) − 1; for quarterly, use (1 + annual)^(1/4) − 1. A 12% annual CAGR equals a monthly rate of (1.12)^(1/12) − 1 = 0.95%, not 1%, and a quarterly rate of 1.94%. Reversing it, a steady 1% monthly gain compounds to (1.01)^12 − 1 = 12.68% per year, not 12%.

How do I calculate revenue CAGR for a company?

Revenue CAGR uses the same formula with starting and ending revenue: (end revenue / start revenue)^(1/n) − 1. If revenue grew from $500,000 to $900,000 over 5 years, CAGR = (900,000/500,000)^(1/5) − 1 = 12.47%. Analysts use revenue CAGR to benchmark top-line growth across companies and to feed forward projections into discounted cash flow models for valuation.

How do I calculate EPS CAGR?

EPS CAGR measures the compound annual growth of earnings per share: (ending EPS / beginning EPS)^(1/n) − 1. If EPS rose from $2.50 to $4.10 over 6 years, CAGR = (4.10/2.50)^(1/6) − 1 = 8.59%. Equity analysts use EPS CAGR to gauge earnings momentum and to estimate the implied growth rate baked into a stock's current P/E multiple.

How do I calculate market-size CAGR for an industry forecast?

Market-size CAGR projects how fast a market expands: (ending size / starting size)^(1/n) − 1. If a market grows from $5 billion to $12 billion over 7 years, CAGR = (12/5)^(1/7) − 1 = 13.32%. Market-research reports quote this figure to forecast future size; reversed, you can project forward with future size = current size × (1 + CAGR)^n.

What is the difference between CAGR, IRR, XIRR, and AAGR?

CAGR is the compound rate between two endpoints with no interim cash flows; AAGR is the simple arithmetic average of yearly returns and overstates compound growth. IRR and XIRR handle multiple cash flows: IRR assumes evenly spaced periods, while XIRR uses actual dates. For +50%, −30%, +20%, AAGR is 13.33% but CAGR is only 8.01%. Use CAGR for two endpoints, XIRR for contributions.

How do I find the present value needed to reach a goal using CAGR?

Rearrange the CAGR formula to solve for present value: PV = FV / (1 + r)^n. To have $100,000 in 10 years at an assumed 7% CAGR, you need 100,000 / (1.07)^10 = $50,834.93 today. Reversing it to project a future value, FV = PV × (1 + r)^n, so $30,000 at 9% for 12 years grows to $84,379.94.

Guides & articles

• How to calculate CAGR: formula, Excel method, and worked examples
• How to Use Reverse CAGR to Project Future Value
• CAGR vs Average Annual Return: What's the Difference?

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