Compound Annual Growth Rate (CAGR) is the rate at which an investment would have grown if it grew at a steady annual rate. It smooths out year-to-year volatility and is the most accurate way to compare growth rates across different time periods.
CAGR = (End Value / Start Value)^(1/n) − 1
End Value = final value of the investment, Start Value = beginning value, n = number of years in the period, Result is expressed as a decimal (multiply by 100 for %)
Example 1: Investment grew from $10,000 to $18,000 over 6 years
Result: CAGR = 10.27% per year
Example 2: Company revenue grew from $2M to $5M over 4 years
Result: CAGR = 25.74% per year
Use our free CAGR Calculator to skip the manual math.
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