CAGR Calculator + Excel Formula Builder
Enter your values to instantly calculate compound annual growth rate and get a ready-to-paste Excel formula.
If you are searching for the formula for calculating CAGR in Excel, here is the short version:
In cell references, that usually looks like this:
What CAGR means
CAGR stands for Compound Annual Growth Rate. It tells you the single annual growth rate that would turn a starting value into an ending value over a specific time period, assuming smooth compounding.
It is widely used for investment returns, business revenue growth, user growth, portfolio tracking, and performance comparisons.
Exact Excel formulas you can use
1) Standard CAGR formula
- A2 = beginning value
- B2 = ending value
- C2 = number of years
2) Same result using POWER()
This is mathematically identical. Some people prefer it because it reads more clearly than the exponent operator.
3) Using the built-in RRI function
RRI returns the equivalent growth rate directly, where:
- C2 = number of periods (years)
- A2 = present value
- B2 = future value
Step-by-step example
Suppose an investment grows from $10,000 to $18,000 in 5 years.
- Place 10000 in A2
- Place 18000 in B2
- Place 5 in C2
- In D2, type:
=(B2/A2)^(1/C2)-1 - Format D2 as Percentage
The result is approximately 12.48%.
| Beginning Value | Ending Value | Years | CAGR |
|---|---|---|---|
| 1,000 | 1,800 | 5 | 12.48% |
| 5,000 | 4,000 | 3 | -7.17% |
| 25,000 | 100,000 | 10 | 14.87% |
Common mistakes when calculating CAGR in Excel
Forgetting the parentheses
Excel order of operations matters. Always wrap the ratio and the reciprocal-year exponent correctly:
Using total periods incorrectly
Use years if you want annual CAGR. If your period is in months, convert to years (months/12) first.
Not formatting as percentage
Excel may show 0.1248 instead of 12.48%. Apply Percentage format for readability.
Using zero or negative beginning/ending values
The classic CAGR formula requires positive values for clean financial interpretation. Zero or negative values can produce invalid or misleading outputs.
CAGR vs average annual return
These are not the same. Simple average annual return adds yearly returns and divides by years. CAGR includes compounding and is usually the better metric for long-term growth comparisons.
FAQ
Can CAGR be negative?
Yes. If ending value is lower than beginning value (and both are positive), CAGR will be negative.
Can I calculate CAGR for months?
Yes. Use years as a decimal, for example 18 months = 1.5 years.
Is CAGR the same as IRR?
No. CAGR assumes one beginning value and one ending value. IRR handles multiple cash flows over time.
Bottom line
The easiest and most reliable formula for calculating CAGR in Excel is:
Use the calculator above whenever you want a quick answer and an instant Excel-ready formula.