CAGR Calculator, Compound Annual Growth Rate

CAGR, the compound annual growth rate, is the constant yearly rate that smooths an investment's journey from a beginning value B to an ending value E over n years. It is the standard metric for comparing investments of different durations because it answers one clean question: “what single annual rate, compounded, gets me from here to there?” The definition is universal across corporate finance and the CFA curriculum:

CAGR = (E ÷ B)^{(1 ÷ n)} − 1

This calculator runs that identity in three directions:

1. Find CAGR, given B, E, and n, it returns the rate directly from the formula above.
2. Project value, given a known CAGR g, it rearranges to E = B × (1 + g)ⁿ to forecast a future value.
3. Find years, given B, E, and g, it solves for time with n = ln(E ÷ B) ÷ ln(1 + g).

Two cross-checks back every answer. First, the engine computes CAGR a second way, through logarithms, exp(ln(E÷B)÷n) − 1 , and confirms it matches the power-based formula. Second, it walks the money forward year by year, multiplying by (1 + CAGR) each year, and verifies the final year lands exactly on the ending value. That is the table you see beneath the results: visible proof the single rate reproduces the whole path.

Because nominal growth can be eaten by inflation, the tool optionally reports the real CAGR using the Fisher relation, (1 + CAGR) ÷ (1 + inflation) − 1. Sri Lanka's inflation (CCPI) is published by the Central Bank of Sri Lanka; enter the rate that fits your period. The doubling-time strip shows the exact ln 2 ÷ ln(1 + CAGR) alongside the Rule-of-72 shortcut so you can sanity-check it in your head. Negative growth is fully supported, if the ending value is lower, CAGR comes back negative and is labelled a decline rather than an error.

Counting the number of years correctly

The most common CAGR mistake is getting n wrong. n is the number of yearly gaps between the two values, not the number of year labels you can list. From a value recorded at the end of 2026 to one recorded at the end of 2030 is 2030 − 2026 = 4 years, even though five labels (2026 to 2030) appear in that range. Using 5 by mistake makes growth look slower than it really was: in the 2026 → 2030 example below, the true 12.47% turns into a wrong 9.86%. If your two values sit on uneven dates, convert the gap to decimal years: 30 months is 2.5 years and 18 months is 1.5 years. The calculator accepts fractional years and adds a partial final row to the year-by-year table so the path still lands on the ending value.

Edge cases and limits

• Zero or negative starting value. The formula divides by B, so a beginning value of zero (say, a business with no revenue in its first year) has no defined CAGR, and a negative value such as a net loss breaks the root. The tool asks for a beginning value above zero instead of returning a misleading number.
• Falling values. When E is below B the ratio is under 1 and the result is negative. That is a valid answer: the average yearly rate of decline.
• Zero growth. In Project value and Find years modes, a 0% rate leaves the value unchanged forever, so the tool tells you no number of years can reach a different target.
• Contradictory inputs. A positive CAGR can never shrink a value. Asking Find years to reach a lower target at +10% returns a plain explanation, not a negative time.
• Range caps. Time horizons are capped at 100 years and entered rates must sit between −99% and 1,000% a year. Outside those bounds the arithmetic still runs, but the answer stops meaning anything practical.

What CAGR does not tell you

CAGR looks at two endpoints only, so it hides the ride in between. A unit trust that rose 50% in one year and fell 50% the next has a CAGR of −13.40%, even though the average of its two yearly returns is 0%. CAGR also assumes one lump sum with nothing added or withdrawn. If you paid in every month, a single CAGR misstates your return: model the deposits with the compound interest calculator instead, or price a guaranteed-rate alternative with the Sri Lanka fixed deposit calculator. To check whether growth actually beat rising prices, look up the matching CCPI change in the Sri Lanka inflation calculator and enter it here as the inflation rate.

Several return figures get quoted side by side on fund fact sheets, company reports and property listings. They answer different questions, and mixing them up is how a mediocre investment ends up looking like a strong one.

• ROI (total return) is (E − B) ÷ B. It ignores time, so 60% over 4 years and 60% over 10 years look identical. Work it out with the ROI calculator, then convert it to a yearly figure with CAGR = (1 + ROI)^1/n − 1.
• Arithmetic average return is the plain mean of each year's return. Whenever returns vary it comes out higher than CAGR, and the gap widens as the swings get bigger. CAGR is the figure that matches the money you actually ended with.
• Year-on-year growth is each single year's change. CAGR is their geometric mean: multiply every (1 + yearly rate) together, take the nth root, and subtract 1.
• IRR / XIRR is the money-weighted rate that accounts for every deposit and withdrawal on its date. With a single lump sum and nothing in between, IRR and CAGR are exactly the same number.

A practical rule: use CAGR to compare lump-sum investments or business metrics (revenue, subscribers, index levels) over different time spans; use XIRR when money moved in and out along the way; and never compare a total ROI from one investment against an annual rate from another.

• Investopedia: Compound Annual Growth Rate (CAGR): formula definition
• Corporate Finance Institute: Compound Annual Growth Rate (CAGR)
• Investopedia: Fisher effect: nominal vs real rates (basis for real CAGR)
• Investopedia: Rule of 72: doubling-time approximation
• Colombo Stock Exchange (CSE): official ASPI index levels (for real market examples)
• Central Bank of Sri Lanka (CBSL): CCPI inflation & deposit rates (for real-CAGR inputs)

The CAGR identity is pure arithmetic, not a jurisdiction-specific rate, so it needs no statutory table, only the algebra, which this page cross-checks by forward simulation and a second log-based formula. Methodology last reviewed on 2026-09-14.