CAGR Calculator Excel is the essential tool for investors and business professionals seeking to measure performance accurately. Compound Annual Growth Rate (CAGR) provides a smoothed annual growth rate that eliminates the volatility of periodic returns, offering a clear picture of investment performance over time.
Use our free online CAGR Calculator Excel tool below to instantly calculate your compound annual growth rate. Simply enter your starting value, ending value, and the number of years, then click calculate to see your CAGR percentage. You can also export your calculation directly to Excel.
| A | B |
| Starting Value | |
| Ending Value | |
| Number of Years | |
| CAGR Formula | = (Ending ÷ Starting) ^ (1 ÷ Years) − 1 |
| CAGR Result |
CAGR, or Compound Annual Growth Rate, is a financial metric that represents the mean annual growth rate of an investment over a specified time period longer than one year. It describes the rate at which an investment would have grown if it had grown at a steady rate, which rarely happens in reality. CAGR smooths the returns and provides a clearer picture of investment performance.
CAGR = (Ending Value / Beginning Value)(1 / Number of Years) - 1
Let's say you invested $10,000 in a stock, and after 5 years, your investment is worth $16,105. To calculate the CAGR:
Using the CAGR formula: CAGR = ($16,105 / $10,000)(1/5) - 1 = 0.10 or 10%
This means your investment grew at an average annual rate of 10% over the 5-year period.
The mathematical formula for CAGR is straightforward but powerful for investment analysis:
CAGR = (End Value / Start Value)(1 / Years) - 1
Let's break down each component of this formula:
Suppose you purchased a property for $200,000 and sold it 7 years later for $350,000. Let's calculate the CAGR manually:
CAGR = ($350,000 / $200,000)(1/7) - 1
CAGR = (1.75)(0.142857) - 1
CAGR = 1.083 - 1 = 0.083 or 8.3%
This means your property appreciated at an average annual rate of 8.3% over the 7-year period.
Excel provides several methods to calculate CAGR, each with its own advantages. Here are the most common approaches:
The POWER function is the most direct way to calculate CAGR in Excel, as it directly implements the CAGR formula:
Example: If your starting value is in cell B1, ending value in B2, and years in B3, the formula would be:
Remember to format the result as a percentage to make it easier to read.
The RATE function is another Excel function that can calculate CAGR, especially useful when dealing with multiple periods:
Example: With the same cell references as above:
Note that the starting value needs to be negative in the RATE function to represent an outflow of cash (investment).
Download our comprehensive Excel CAGR template that includes all advanced features:
The most direct CAGR formula in Excel uses the POWER function: =POWER(End_Value/Start_Value, 1/Years) - 1. Alternatively, you can use the RATE function: =RATE(Years, 0, -Start_Value, End_Value). Both will give you the same result when formatted as a percentage.
The average growth rate simply divides the total growth by the number of years, ignoring compounding effects. CAGR accounts for compounding by calculating the consistent rate that would take you from the beginning value to the ending value over the specified period. CAGR is generally considered more accurate for measuring investment performance over multiple periods.
For monthly data, use the formula: =(End_Value/Start_Value)^(12/Months) - 1. For quarterly data: =(End_Value/Start_Value)^(4/Quarters) - 1. This annualizes the growth rate regardless of the time period used in the calculation.
Yes, CAGR is an excellent metric for comparing companies, especially when they have been in business for different time periods. By calculating the CAGR of revenue, profit, or other key metrics for each company over the same time frame, you can make meaningful comparisons of their growth performance.
Explore these additional financial calculators to enhance your analysis: