OneTaskBy Tim King · Updated
CAGR Calculator
Compound Annual Growth Rate Formula, Total Growth and Multiple Over Time
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How the CAGR Calculator works
This CAGR calculator finds the steady yearly growth rate that turns a starting value into an ending value over a set number of years. It works for investments, revenue, prices or any figure that grows, and shows the rate, the total growth and the growth multiple.
CAGR calculator formula
Compound annual growth rate smooths an uneven path into one yearly rate. The CAGR calculator uses:
CAGR = (end ÷ start)^(1 ÷ years) − 1
The multiple is end ÷ start. CAGR is always lower than the simple average of total growth divided by years, because each year's growth builds on the last. It says nothing about volatility along the way.
Worked example: an investment over 5 years
10,000 grows to 18,000 in 5 years. The multiple is 1.80× and the CAGR is 1.8^(1/5) − 1 = 12.47% a year. Simple averaging would say 16% a year, which overstates the true compounded rate.
Worked example: a property over 8 years
A home bought for 250,000 is worth 400,000 eight years later. That is a CAGR of 6.05% a year. The table shows how many years a given multiple takes at each rate, so you can compare assets held for different lengths of time.
CAGR reference table
CAGR for growth multiples from 1.1× to 10× over 3, 5, 10 and 20 years.
| Multiple | 3 years | 5 years | 10 years | 20 years |
|---|---|---|---|---|
| 1.1× | 3.23% | 1.92% | 0.96% | 0.48% |
| 1.2× | 6.27% | 3.71% | 1.84% | 0.92% |
| 1.25× | 7.72% | 4.56% | 2.26% | 1.12% |
| 1.3× | 9.14% | 5.39% | 2.66% | 1.32% |
| 1.4× | 11.87% | 6.96% | 3.42% | 1.70% |
| 1.5× | 14.47% | 8.45% | 4.14% | 2.05% |
| 1.6× | 16.96% | 9.86% | 4.81% | 2.38% |
| 1.75× | 20.51% | 11.84% | 5.76% | 2.84% |
| 1.8× | 21.64% | 12.47% | 6.05% | 2.98% |
| 2× | 25.99% | 14.87% | 7.18% | 3.53% |
| 2.25× | 31.04% | 17.61% | 8.45% | 4.14% |
| 2.5× | 35.72% | 20.11% | 9.60% | 4.69% |
| 2.75× | 40.10% | 22.42% | 10.65% | 5.19% |
| 3× | 44.22% | 24.57% | 11.61% | 5.65% |
| 3.5× | 51.83% | 28.47% | 13.35% | 6.46% |
| 4× | 58.74% | 31.95% | 14.87% | 7.18% |
| 4.5× | 65.10% | 35.10% | 16.23% | 7.81% |
| 5× | 71.00% | 37.97% | 17.46% | 8.38% |
| 6× | 81.71% | 43.10% | 19.62% | 9.37% |
| 7× | 91.29% | 47.58% | 21.48% | 10.22% |
| 8× | 100.00% | 51.57% | 23.11% | 10.96% |
| 10× | 115.44% | 58.49% | 25.89% | 12.20% |
Quick answers
- Doubling in 5 years is a CAGR of 14.87%.
- Doubling in 10 years is a CAGR of 7.18%.
- Tripling in 10 years is a CAGR of 11.61%.
- A fall in value gives a negative CAGR.
- Years can be fractional, such as 2.5.
FAQ
What is a good CAGR?
It depends on what you are measuring. For a diversified stock portfolio, a long-run CAGR in the high single digits has been typical historically. For a small company's revenue, much higher rates are common early on and slow as it grows.
How is CAGR different from average annual return?
The average annual return adds each year's percentage and divides by the number of years, ignoring compounding. CAGR is the single rate that compounds to the same result, so it is the fairer measure of growth over time.
Does CAGR account for money added along the way?
No. CAGR only looks at the start and end values. If you paid money in or took it out during the period, use an IRR or money-weighted return instead, such as the NPV and IRR calculator.
Can the start value be zero?
No. Growth from zero has no defined rate because any end value is an infinite multiple. The start and end values both need to be above zero for the formula to work.
See also: all Investing tools, Pay, Bills, Property, Debt, Saving.
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