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

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 .

Function details

XIRR