Calculate compound annual growth rate from a beginning value, ending value, and time period, with total growth and growth multiple.
How CAGR is calculated
CAGR turns the change from a beginning value to an ending value into an equivalent constant annual growth rate. It is useful for comparing periods of different lengths.
CAGR smooths the path between two values. It does not show volatility, yearly gains and losses, deposits, or withdrawals between the start and end dates.
Frequently asked questions
Can the beginning value be zero?
No. CAGR divides by the beginning value, which must be greater than zero.
Can CAGR be negative?
Yes. An ending value below the beginning value produces a negative annual growth rate.
Is CAGR an average of yearly returns?
It is an equivalent compound rate, not the arithmetic average of each year’s return.