Question 1

What is CAGR (Compound Annual Growth Rate)?

Accepted Answer

CAGR is the mean annual growth rate of an investment over a specified period longer than one year. It represents the rate at which an investment would have grown if it had grown at a steady rate. CAGR smooths out volatility to show consistent annual performance.

Question 2

How do I calculate CAGR?

Accepted Answer

The CAGR formula is: CAGR = (Ending Value / Beginning Value)^(1/n) - 1, where n is the number of years. For example, if $10,000 grows to $25,000 over 5 years: CAGR = (25000/10000)^(1/5) - 1 = 20.11%.

Question 3

What is the difference between CAGR and average annual return?

Accepted Answer

Average annual return is a simple arithmetic mean of yearly returns, while CAGR accounts for compounding. CAGR gives a more accurate picture of investment performance because it considers the effect of growth on growth.

Question 4

Is this CAGR calculator free?

Accepted Answer

Yes, this CAGR calculator is completely free with no limitations. No registration required, no credit card needed. All calculations are performed in your browser for maximum privacy.

Question 5

How do I calculate CAGR in Excel?

Accepted Answer

In Excel, you can use: =((EndValue/StartValue)^(1/Years))-1 or the RATE function: =RATE(Years,0,-StartValue,EndValue). For example: =RATE(5,0,-10000,25000) returns 20.11%.

Question 6

What is a good CAGR?

Accepted Answer

A "good" CAGR depends on the context. For reference: S&P 500 historical CAGR is about 10%, real estate typically 3-5%, high-growth tech companies may exceed 25%. Compare your CAGR to relevant benchmarks.

Question 7

Can CAGR be negative?

Accepted Answer

Yes, CAGR can be negative when the ending value is less than the beginning value. This indicates a declining investment. For example, if $10,000 drops to $8,000 over 3 years, the CAGR would be -7.17% per year.

Question 8

How do I use CAGR for revenue growth?

Accepted Answer

To calculate revenue CAGR, use your first year's revenue as the beginning value and most recent year as ending value. This is commonly used in business valuations and investor presentations.

Question 9

What are the limitations of CAGR?

Accepted Answer

CAGR ignores volatility - it assumes smooth growth which may not reflect reality. It doesn't account for timing of cash flows, risk, or external factors. Always use CAGR alongside other metrics for a complete picture.

Question 10

How do I project future value using CAGR?

Accepted Answer

Use the formula: Future Value = Present Value × (1 + CAGR)^years. For example, if you have $10,000 and expect 8% CAGR for 10 years: FV = $10,000 × (1.08)^10 = $21,589.

Question 11

How long to double my money at a given CAGR?

Accepted Answer

Use the Rule of 72: divide 72 by your CAGR percentage. At 10% CAGR, money doubles in ~7.2 years. At 20% CAGR, it doubles in ~3.6 years.

Question 12

How is this different from ElyxAI?

Accepted Answer

This free calculator handles basic CAGR calculations. ElyxAI is a powerful AI agent that works directly in Excel to automate complex growth analysis, create dynamic projections, build financial models, and much more. Try ElyxAI free for 7 days!

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