# Compound Annual Growth Rate (CAGR) Calculator Calculate the compound annual growth rate (CAGR) from a beginning value, ending value and number of years; compare with the simple average growth rate and visualize the smooth growth curve. CAGR = (EV/BV)^(1/n) - 1. > Canonical page: https://elysiatools.com/en/tools/compound-annual-growth - **Category:** Finance - **Keywords:** cagr, compound annual growth rate, growth rate, investment, return, finance, annualized return ## Overview The Compound Annual Growth Rate (CAGR) Calculator helps you determine the annualized rate of return for an asset or business over a specified period. By inputting the beginning value, ending value, and the number of years, you can instantly calculate the CAGR, compare it to the simple average growth rate, and visualize the smoothed growth curve. ## Inputs - **Beginning Value** (number): e.g. 10000 - **Ending Value** (number): e.g. 25000 - **Number of Years** (number): e.g. 5 - **Decimal Places** (number) ## When to use - When evaluating the historical performance of an investment portfolio or mutual fund over multiple years. - When comparing the growth rates of different assets or business revenues that experience high volatility year-over-year. - When projecting future investment values or setting realistic long-term financial growth targets. ## How it works - Enter the initial investment amount in the Beginning Value field. - Input the final investment amount in the Ending Value field and specify the duration in years. - Adjust the decimal places for precision and click calculate to generate the CAGR percentage, a comparison with the simple average growth rate, and a visual growth curve. ## Use cases - Analyzing the annualized return of a stock portfolio over a five-year period. - Comparing the revenue growth rates of two competing businesses over a decade. - Evaluating the performance of real estate investments from purchase to sale. ## Frequently asked questions ### What is the difference between CAGR and simple average growth rate? CAGR accounts for the compounding effect over time, representing a smoothed annual growth rate, whereas the simple average growth rate merely divides the total growth by the number of years. ### Can CAGR be negative? Yes, if the ending value is lower than the beginning value, the CAGR will be negative, indicating a loss over the period. ### Does CAGR account for volatility during the investment period? No, CAGR calculates a smoothed rate of return and does not reflect year-to-year fluctuations or portfolio volatility. ### How does the number of years affect the CAGR calculation? The number of years acts as the exponent denominator in the formula; a longer period spreads the growth out, resulting in a lower annualized rate for the same total return. ### Can I calculate CAGR for periods shorter than a year? 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