Compound Annual Growth Rate (CAGR)

Growth
Updated Apr 2026 • Has calculator

The steady annual growth rate that takes an investment from its starting value to its ending value over a given period.

What is CAGR?

The compound annual growth rate (CAGR) smooths an investment or business metric's growth into a single annual rate that, if applied consistently every year, would produce the actual observed change over the period. It eliminates the volatility of year-to-year fluctuations, making it the standard tool for comparing growth rates across companies, time periods, and asset classes. CAGR is not an accounting measure — it is a hypothetical constant rate — so it should always be considered alongside actual annual results to avoid being misled by a single exceptional year at the beginning or end of the measurement window.

Formula

CAGR = (End Value ÷ Start Value)^(1 ÷ Years) − 1

Worked Example

Worked example — Apple Inc. (AAPL)

FY2019 – FY2024 (Revenue)

Step 1  Revenue FY2019: $260,174M
Step 2  Revenue FY2024: $391,035M
Step 3  Years: 5
Step 4  CAGR = (391,035 ÷ 260,174)^(1÷5) − 1 = 8.49% per year
Step 5  → Apple’s revenue grew at ~8.5% annually over five years

Source: Apple Annual Reports FY2019 & FY2024 (2024-11-01)

Calculate CAGR

Value at the beginning of the period (must be positive)

Value at the end of the period (must be positive)

Number of years in the measurement period

CAGR

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Not investment advice.

How to Interpret CAGR

< 5
Slow — below long-run equity market average
5 – 10
Moderate — in line with historical market
10 – 20
Fast — above-market growth rate
> 20
Exceptional — high-growth company

📚 FIRE Planning — Complete the path

  1. FIRE Number
  2. Safe Withdrawal Rate
  3. Coast FIRE
  4. CAGR
  5. Rule of 72
Sources
  1. Apple Inc. — Annual Reports FY2019 & FY2024
  2. CFA Institute — Quantitative Methods, 7th ed.
  3. Investopedia — Compound Annual Growth Rate