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.

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