Ending Value - Required. Final value of investment or metric at the end of the period
Beginning Value - Required. Starting value at the beginning of the measurement period
Number of Years - Required. Time period in years (can be decimal for partial years)
| A | B | C | D | |
|---|---|---|---|---|
| 1 | Investment | Initial | Final | Years |
| 2 | Portfolio | $10,000 | $15,000 | 3 |
| 3 | CAGR: | =((C2/B2)^(1/D2))-1 14.47% |
Investment grew from $10K to $15K in 3 years
=((1.5)^0.333)-1 → 14.47%
Dynamic calculation from data table
Format as percentage for readability
Alternative syntax using POWER function
Same result, more readable for complex formulas
Revenue from $1M to $2.5M in 3 years
=((2.5)^0.333)-1 → 35.72%
Calculate the compound annual growth rate of a stock portfolio to measure true investment performance over multiple years. The CAGR formula in Excel accounts for volatility and compounding, giving investors an accurate picture of average annual returns. This Excel calculation is essential for comparing different investment strategies, evaluating fund manager performance, planning retirement savings, and making informed portfolio allocation decisions. Financial advisors use CAGR to communicate historical performance and project future portfolio values for clients.
| A | B | C | D | E | ||
|---|---|---|---|---|---|---|
| 1 | Year | 2020 | 2021 | 2022 | 2023 | 2024 |
| 2 | Value | $50,000 | $55,000 | $48,000 | $62,000 | $75,000 |
| 3 | CAGR | =((E2/A2)^(1/4))-1 8.45% |
Track company revenue growth using the CAGR formula in Excel for accurate performance measurement and investor reporting. The Excel CAGR calculation helps business owners and CFOs communicate consistent growth rates to stakeholders, set realistic revenue targets, and benchmark against industry standards. This formula is critical for startup pitch decks, annual reports, board presentations, and strategic planning sessions where demonstrating sustainable growth is essential for funding and business valuation.
| A | B | C | D | ||
|---|---|---|---|---|---|
| 1 | Year | Year 1 | Year 2 | Year 3 | Year 4 |
| 2 | Revenue | $1,000,000 | $1,400,000 | $1,800,000 | $2,500,000 |
| 3 | CAGR | =((D2/A2)^(1/3))-1 35.72% |
❌ The Problem:
✅ Solution:
=((Ending/Beginning)^(1/Years))-1Use the power function (^) to calculate compound annual growth rate. The CAGR formula in Excel accounts for exponential growth by taking the nth root of the total return, where n is the number of years. This gives you the geometric mean return that compounds to reach the ending value, which is far more accurate than simple arithmetic averaging for multi-year investment performance analysis.
❌ The Problem:
✅ Solution:
=(End Year - Start Year) for full years onlyIf your investment started in 2020 and ended in 2025, that is 5 years (2025-2020=5), not 6 years. The Excel CAGR formula requires the exact number of compounding periods. For partial years, use decimal values (e.g., 3.5 years for 3 years and 6 months). Always verify your time period calculation before applying the CAGR formula to avoid significant errors in growth rate analysis.
❌ The Problem:
✅ Solution:
Apply percentage format to CAGR cellThe CAGR formula in Excel returns a decimal value (like 0.1447). Always format the result cell as a percentage with 2 decimal places for clear communication. Right-click the cell → Format Cells → Percentage → 2 decimal places. This makes your Excel CAGR calculation immediately understandable in financial reports, investor presentations, and business dashboards without requiring viewers to do mental math conversions.
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