A compound annual growth rate (CAGR) measures the rate of return for an investment — such as a mutual fund or bond — over an investment period, such as 5 or 10 years. The CAGR is also called a "smoothed" rate of return because it measures the growth of an investment as if it had grown at a steady rate on an annually compounded basis. To calculate a CAGR, use the XIRR function.
Example
The example may be easier to understand if you copy it to a blank worksheet.
How to copy an example

Create a blank workbook or worksheet.

Select the example in the Help topic.
Note: Do not select the row or column headers.
Selecting an example from Help

Press CTRL+C.

In the worksheet, select cell A1, and press CTRL+V.

To switch between viewing the results and viewing the formulas that return the results, press CTRL+` (grave accent), or on the Formulas tab, in the Formula Auditing group, click the Show Formulas button.


Note:

When you compare the CAGRs of different investments, make sure that each rate is calculated over the same investment period.

You can view the number as a percentage. Select the cell, and then on the Home tab, in the Number group, click Percent Style .