Calculate a compound annual growth rate (CAGR)

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

  1. Create a blank workbook or worksheet.

  2. Select the example in the Help topic.

    Note: Do not select the row or column headers.

    Selecting an example from Help

    Selecting an example from Help

  3. Press CTRL+C.

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

  5. 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.

1

2

3

4

5

6

A

B

Values

Dates

-10,000

January 1, 2008

2,750

March 1, 2008

4,250

October 30, 2008

3,250

February 15, 2009

2,750

April 1, 2009

Formula

Description (Result)

=XIRR(A2:A6,B2:B6)

The compound annual growth rate (0.373362535 or 37.34%)

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 Button image .

Function details

XIRR

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