Calculate CAGR (Compound Annual Growth Rate)

Excel & Google Sheets

How it works

B2/A2 is the total growth multiple — 1,728 ÷ 1,000 = 1.728. Raising it to the power 1/C2 asks "what number, multiplied by itself C2 times, gives that multiple?" For 3 years that's the cube root: 1.728^(1/3) = 1.2. Subtracting 1 converts the multiple into a rate: 0.2, or 20% per year. That's the whole point of CAGR — it smooths lumpy year-to-year swings into one steady, compounding rate, which makes a 3-year investment directly comparable with a 10-year one. The result is a decimal, so format the cell as a percentage.

B2/A2

Ending value divided by starting value — the total growth multiple (1728/1000 = 1.728).

^(1/C2)

The C2-th root: undoes C2 years of compounding to find one year's multiple (1.2).

-1

Turns the yearly multiple into a rate: 1.2 − 1 = 0.2 = 20% per year.

When to use it

Use it to report revenue or user growth over multi-year periods, compare fund or portfolio returns with different timespans, or set growth targets in a plan.

Common mistakes

• ✕Using the number of data points instead of the number of periods.

  ✓Values for 2023–2026 span 3 years, not 4. C2 must be the count of gaps between the start and end values, or the rate comes out too low.

• ✕Dividing total growth by years instead of taking the root.

  ✓72.8% ÷ 3 = 24.3% ignores compounding and overstates the rate. The correct CAGR here is exactly 20% — always use the ^(1/years) root.

• ✕A negative or zero starting value.

  ✓CAGR is undefined when A2 ≤ 0 — the root of a negative multiple returns #NUM!. Start the measurement from the first positive period instead.