# Calculate a compound annual growth rate (CAGR)

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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.

If the XIRR function is not available and returns the #NAME? error, install and load the Analysis ToolPak add-in.

2. In the Add-Ins available list, select the Analysis ToolPak check box, and then click OK.
3. If necessary, follow the instructions in the setup program.

## Example

The example may be easier to understand if you copy it to a blank worksheet.

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
1. Press CTRL+C.
2. In the worksheet, select cell A1, and press CTRL+V.
3. 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.
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%)

Notes

• When you compare the CAGRs of different investments, make sure that each rate is calculated over the same investment period.
• To view the number as a percentage, select the cell and then click Cells on the Format menu. Click the Number tab, and then click Percentage in the Category box.

XIRR

Applies to:
Excel 2003