FV = PV · (1+r)^n, r = (FV/PV)^(1/n) − 1,
n = ln(FV/PV) / ln(1+r), PV = FV / (1+r)^n.What is CAGR?
The Compound Annual Growth Rate (CAGR) is one of the most reliable ways to calculate investment returns over time. Unlike simple averages, CAGR accounts for compounding, showing the rate at which an investment would have grown if it grew at a steady pace every year.
Formula:
CAGR = (Final Value / Initial Value) 1/n – 1
Free Online CAGR Calculator
Enter your initial value, final value, and number of years below to calculate CAGR instantly:
Why is CAGR Important?
- 📊 Provides a smoothed growth rate avoiding yearly fluctuations
- 📈 Helps compare different investments over the same period
- 💼 Used by businesses to track revenue or profit growth
- 📉 Assists financial planners in long-term projections
Uses of CAGR Calculator
- Investment growth analysis (stocks, mutual funds, crypto)
- Business performance tracking (revenue, sales)
- Comparing portfolio returns
- Educational & research purposes
Example Calculation
If you invested $90 and it grew to $886.48 in 24 years:
CAGR = ((886.48 ÷ 90)^(1/24)) – 1 = 10% per year
FAQs – Compound Annual Growth Rate (CAGR)
1. What does CAGR tell you?
It shows the average yearly growth rate of an investment over a specific time frame.
2. Is CAGR better than average growth rate?
Yes ✅. CAGR accounts for compounding, while average growth can be misleading.
3. Can CAGR be negative?
Yes. If the final value is less than the initial value, CAGR will be negative, indicating a loss.
4. Who uses CAGR?
Investors, financial planners, businesses, and researchers use CAGR to measure performance.
5. Does CAGR consider volatility?
No. CAGR assumes steady growth and does not reflect market ups and downs.
Final Thoughts
The Compound Annual Growth Rate Calculator is a must-have tool for investors, businesses, and students. Use it to track and compare growth easily — and make smarter financial decisions.