# Compound Annual Growth Rate CAGR formula examples in Excel

To calculate Compound Annual Growth Rate (CAGR) in Excel, the average rate of return for an investment over a period of time, you can use several approaches.

## Formula

=(end/start)^(1/periods)-1

Note that unlike most other financial functions in Excel, future value (FV) does not need to be entered as a negative number.

## Explanation

In the example shown, the formula in H7 is:

=(C11/C6)^(1/B11)-1

### CAGR with a manual formula

CAGR stands for Compound Annual Growth Rate, which is the annual average rate of return for an investment over a period of time. The formula for calculating CAGR manually is:

=(end/start)^(1/periods)-1

The first part of the formula is a measure of total return, the second part of the formula annualizes the return over the life of the investment. The formula in H7 is:

=(C11/C6)^(1/B11)-1

where C11 is the ending value in year 5, C6 is the starting value or initial investment, and B11 is the total number of periods.

### CAGR with the GEOMEAN function

The GEOMEAN calculates geometric mean, and can be used to calculate CAGR. To calculate CAGR with GEOMEAN, we need to use relative changes (percentage change + 1), sometimes called a growth factor. We have these values already in column E so we can use them directly in GEOMEAN the function. The formula in H8 is:

=GEOMEAN(E7:E11)-1

### CAGR with the RRI function

In Excel 2013 and later, you can use the IRR function to calculate CAGR with a simple formula. The formula in H9 is:

=RRI(B11,C6,C11)