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CAGR Calculator

Calculate the accurate annualized compound return rate of assets over a specific timeframe.

Calculator Variables

$
$
yrs

Calculation Overview

Calculate the Compound Annual Growth Rate (CAGR) of any stock, portfolio, or business venture. Quick and precise formula calculator.

Mathematical Model & Formula

CAGR = (EV / BV)^(1/t) - 1

CAGR represents the smoothed annualized rate of return at which an asset would have grown if it grew at a steady rate over the period, compounding annual yields.

Variables Defined:
  • CAGR: Compound Annual Growth Rate
  • EV: Ending Value of the asset
  • BV: Beginning / Initial value of the asset
  • t: Time horizon in years

Worked Example Scenario

Scenario: An investment begins at $5,000 and matures to $15,000 over 5 years.

  1. EV = $15,000, BV = $5,000, t = 5
  2. Divide EV/BV: 15,000 / 5,000 = 3
  3. Raise to 1/t power: 3^(1/5) = 3^0.2 ≈ 1.2457
  4. Subtract 1 to convert to decimal: 1.2457 - 1 = 0.2457

Result: The CAGR is 24.57%.

Frequently Asked Questions

What does CAGR show us?

CAGR provides a standardized, annualized return that allows you to easily compare assets with different volatility, timelines, or initial investments on an equal playing field.

Academic & Regulatory References