Calculating Compound Annual Growth Rate Excel

CAGR Calculator

Calculate Compound Annual Growth Rate for Investments & Revenue

Calculated CAGR

0%

Please ensure all values are positive and the beginning value is not zero.

function calculateCAGR() { var beg = parseFloat(document.getElementById('beginningValue').value); var end = parseFloat(document.getElementById('endingValue').value); var periods = parseFloat(document.getElementById('totalPeriods').value); var resultDiv = document.getElementById('cagrResultWrapper'); var errorDiv = document.getElementById('cagrError'); var valueDisplay = document.getElementById('cagrValue'); var summaryDisplay = document.getElementById('cagrSummary'); if (beg > 0 && end >= 0 && periods > 0) { errorDiv.style.display = 'none'; // CAGR Formula: ((Ending Value / Beginning Value) ^ (1 / Number of Years)) – 1 var cagr = Math.pow((end / beg), (1 / periods)) – 1; var cagrPercent = (cagr * 100).toFixed(2); valueDisplay.innerHTML = cagrPercent + "%"; summaryDisplay.innerHTML = "An initial value of " + beg.toLocaleString() + " growing to " + end.toLocaleString() + " over " + periods + " periods represents a geometric progression of " + cagrPercent + "% per period."; resultDiv.style.display = 'block'; } else { resultDiv.style.display = 'none'; errorDiv.style.display = 'block'; } }

How to Calculate CAGR in Excel

The Compound Annual Growth Rate (CAGR) provides a smoothed rate of return, representing the constant annual growth rate required for an investment to grow from its beginning balance to its ending balance. This is particularly useful in Excel for comparing different asset classes or business performance over several years.

Option 1: The Manual Formula

In Excel, you can use the arithmetic operators to calculate CAGR manually. Assuming your Ending Value is in cell B2, your Beginning Value is in B1, and the number of years is in B3, use this formula:

=((B2/B1)^(1/B3))-1

Option 2: Using the RRI Function

Excel has a built-in function specifically designed for CAGR called RRI. This function returns an equivalent interest rate for the growth of an investment.

=RRI(number_of_periods, beginning_value, ending_value)

Practical Example

Scenario	Start Value	End Value	Years	CAGR
Stock Portfolio	10,000	18,500	5	13.09%
SaaS Revenue	50,000	200,000	3	58.74%

Why CAGR Matters

Unlike a simple average return, CAGR accounts for the effects of compounding. It "smooths" out the volatility of an investment by providing a single figure that describes the path from the start to the end. It is the most accurate way to compare the historical performance of investments that may have had wildly different year-to-year returns.

Pro Tip: When using Excel, ensure your number of periods represents the number of intervals, not the number of data points. For example, if you have data for 2020, 2021, and 2022, that is 3 data points but only 2 periods.