How the CAGR Calculator Works
Enter the initial value, the final value, and the number of years between them. The calculator works out the constant annual growth rate that connects the two.
CAGR smooths out the ups and downs along the way into one average yearly figure. That makes it easier to compare investments of different types or lengths side by side.
Formula Used
CAGR is calculated using the following formula:
CAGR = ((Final Value / Initial Value) ^ (1/n) − 1) × 100- nNumber of years between the initial and final value
Example Calculation
Suppose an investment grows from an initial value to a final value over 5 years.
- Initial Value100,000
- Final Value200,000
- Time Period5 years
- CAGR ≈ 14.87%
Important Assumptions
- CAGR assumes smooth, steady compounding. It doesn't reflect the actual year-to-year ups and downs, which can be significant for market-linked investments.
- This calculator works with one starting value and one ending value, with no money added or withdrawn in between.
- For investments with regular contributions, like a SIP, CAGR isn't the right measure — use the SIP Calculator or an XIRR calculation instead.