Donaldson R F CAGR Calculator
The single steady annual growth rate that would turn a starting value into an ending value.
How this is worked out
CAGR = (ending value ÷ starting value)1/years − 1. It answers "what single constant annual growth rate, compounding every year, would have turned the starting value into the ending value?" — useful for comparing investments, revenue growth or any other quantity that changed smoothly over several years, even though the real year-to-year growth almost certainly wasn't perfectly smooth. CAGR smooths out that volatility into one comparable number, which is exactly its strength and its main limitation: two investments with the same CAGR can have had very different (and very differently risky) paths to get there.
Frequently asked questions
How is CAGR different from average annual return?
A simple average of each year's percentage change can be misleading when returns are volatile (a 50% gain followed by a 50% loss averages to 0%, but actually leaves you with 75% of your starting value) — CAGR instead measures the real, compounded path from start to finish, which better reflects what actually happened to the money.
Can CAGR be negative?
Yes — if the ending value is lower than the starting value, CAGR comes out negative, showing the constant annual rate of decline over the period.
Related tools: ROI Calculator, Interest Calculator, Inflation Calculator.
Source / Last verified: standard compound-growth-rate formula (general finance) — read/checked 1 October 2026. The default example (£10,000 to £16,000 over 5 years) gives a CAGR of about 9.86%, and compounding that rate back up over 5 years reproduces £16,000 exactly.