calculate cagr in excel

What is CAGR?

CAGR stands for Compound Annual Growth Rate. It tells you the smoothed annual growth rate between a beginning value and an ending value over a period of time. Instead of showing year-by-year ups and downs, CAGR gives one clean annual percentage that answers: “At what constant rate would this have grown each year to get from start to finish?”

This is especially useful for investments, revenue growth, subscribers, portfolio values, and any metric where you want to compare performance over different time periods.

CAGR formula in Excel

The standard CAGR formula is:

In Excel, use either of these formulas:

Then format the result cell as a percentage.

Step-by-step: calculate CAGR in Excel

1) Set up your data

Cell	Label	Example Value
B2	Beginning Value	10000
B3	Ending Value	18500
B4	Years	6

2) Enter the CAGR formula

In cell B5, enter:

3) Format as percentage

With the result cell selected, click Home > Number Format > Percentage. For the example above, the CAGR is about 10.79%.

Using dates instead of years

If you have a start date and end date, calculate years with YEARFRAC:

Example with cells:

This is great when periods are not exactly whole years.

Common mistakes when calculating CAGR in Excel

• Using zero or negative beginning values: CAGR requires a positive start value.
• Wrong year count: make sure the number of years is accurate (especially with partial years).
• Forgetting percentage format: 0.1079 should display as 10.79%.
• Using CAGR for cash-flow-heavy data: if there are contributions/withdrawals, use XIRR instead.

CAGR vs average annual growth

A simple average of yearly returns can mislead because it ignores compounding. CAGR reflects the compound effect and is usually the better metric for long-term performance comparisons.

When to use CAGR (and when not to)

Use CAGR when:

• You know the beginning value, ending value, and time period.
• You want one annualized growth number for comparison.
• You are analyzing investments, revenue, or business growth over time.

Do not rely on CAGR alone when:

• Cash flows occur throughout the period (use IRR/XIRR).
• Volatility and drawdowns matter to your decision.
• You need year-by-year detail, not a smoothed result.

Quick FAQ

Is CAGR the same as annual return?

No. CAGR is a smoothed annualized rate from start to end, not the arithmetic average of yearly returns.

Can CAGR be negative?

Yes. If the ending value is lower than the beginning value, CAGR will be negative.

Can I calculate CAGR monthly?

Yes. Use years as a decimal (for example, 18 months = 1.5 years), or adapt the period formula.

Final takeaway

To calculate CAGR in Excel, use:

It is one of the fastest ways to evaluate long-term growth consistently. Use the calculator above to confirm your number, then copy the Excel formula directly into your spreadsheet.