CAGR Calculator & Growth Rate Formula
The steady yearly growth rate that takes a starting value to an ending value.
Ratio = 150 ÷ 100 = 1.5Raise to 1/3: 1.5^(1/3) = 1.144714Subtract 1, × 100 = 14.4714% per yearTotal change over the period: +50%
How to calculate CAGR
- Divide the ending value by the starting value.
- Raise the result to the power of 1 ÷ the number of years.
- Subtract 1 and multiply by 100.
An investment growing from 10,000 to 16,105.10 over 5 years: 16,105.10 ÷ 10,000 = 1.61051, and 1.610511/5 = 1.1, so the CAGR is 10% a year.
CAGR vs. simple average growth
100 growing to 150 over 3 years is a 50% total increase. Dividing by 3 suggests 16.67% a year, but that overstates it, because each year’s growth builds on the last. The compound rate is 14.471%: 100 × 1.14471 × 1.14471 × 1.14471 ≈ 150.
Year-over-year growth
YoY growth is just percent change between the same period in two consecutive years. Revenue of 2,024 last year and 2,530 this year is (2,530 − 2,024) ÷ 2,024 × 100 = 25% YoY growth. Month-over-month growth works the same way with consecutive months.
| Measure | Formula | Use it for |
|---|---|---|
| Percent change | (new − old) ÷ |old| × 100 | Any single before-and-after comparison |
| YoY / MoM growth | (this period − last period) ÷ last period × 100 | Comparing consecutive periods |
| CAGR | (end ÷ start)^(1 ÷ years) − 1 | Average growth over several years |
Limits of CAGR
CAGR smooths the path between two points and ignores everything in between: a value that crashed and recovered can have the same CAGR as one that rose steadily. It also needs positive start and end values. For investments with deposits and withdrawals along the way, CAGR is not the right measure.
Frequently asked questions
What is the CAGR formula?
CAGR = (ending value ÷ starting value)^(1 ÷ number of years) − 1, then multiply by 100 for a percentage.
What is the year-over-year (YoY) growth formula?
YoY growth = (this year's value − last year's value) ÷ last year's value × 100. It is simply the percent change between two consecutive years.
Why is CAGR lower than the average annual growth?
Because growth compounds. 100 growing to 150 over 3 years is +50% in total. Dividing by 3 gives 16.67% a year, but 16.67% compounded for 3 years would reach about 158.8. The rate that actually reaches 150 is 14.471%.
Can CAGR be negative?
Yes. If the ending value is below the starting value, CAGR is negative, meaning the value shrank at that average yearly rate.
Can I use months instead of years?
Yes. Enter the number of months in the 'years' field and the result is the compound monthly growth rate.