CAGR Calculator
Calculate compound annual growth rate
Understanding CAGR
CAGR represents the smoothed annualized rate of return. Unlike simple average returns, CAGR accounts for the compounding effect, giving a more realistic picture of investment growth.
CAGR = (Ending Value / Beginning Value)^(1/Years) - 1
Frequently Asked Questions
What is CAGR?
CAGR (Compound Annual Growth Rate) is the mean annual growth rate of an investment over a specified period longer than one year. It smooths out the return rate as if growth were constant.
How is CAGR calculated?
CAGR = (Ending Value / Beginning Value)^(1/n) - 1, where n is the number of years.
Is CAGR the same as average return?
No. CAGR accounts for compounding while simple average does not. CAGR gives a more accurate picture of annualized growth.