Annualizing multi-year revenue or value growth
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Calculate compound annual growth rate from positive starting value, ending value and investment period.
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CAGR is a smoothed annualized rate between two endpoints; it does not describe year-by-year volatility or cash flows between those endpoints.
For investments with deposits or withdrawals during the period, an internal-rate-of-return method may be more appropriate.
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Convert the change between a positive beginning value and positive ending value into one smoothed annualized growth rate over the entered number of years. CAGR is an endpoint measure: it does not reveal the path, volatility or intermediate cash flows.
Enter a positive beginning value and ending value.
Enter the elapsed period in years.
Read CAGR together with the total growth multiple and total percentage change so the annualized number is not mistaken for the full-period return.
CAGR = (ending value ÷ beginning value)^(1/years) − 1.
Use the result as a check within this type of task, with the assumptions shown above.
Use the result as a check within this type of task, with the assumptions shown above.
Use the result as a check within this type of task, with the assumptions shown above.
CAGR is the constant compounded annual rate that links the beginning and ending values. It is not the arithmetic average of actual yearly returns.
No. Two paths with very different year-to-year swings can have the same beginning value, ending value and CAGR.
Not by itself. When meaningful cash flows occur between the endpoints, a cash-flow-aware return method such as IRR or XIRR may be more appropriate.
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