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.
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.
||January 1, 2008
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||October 30, 2008
||February 15, 2009
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||The compound annual growth rate (0.373362535 or 37.34%)
- 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 .