CAGR Examples — Compound Annual Growth Rate Explained
CAGR (Compound Annual Growth Rate) smooths investment returns into a single annual rate. Formula: CAGR = (Final Value ÷ Initial Value)^(1/years) − 1. It helps compare investments with different time horizons.
Examples
₹1L to ₹3.1L in 10 years
CAGR = (3.1)^(1/10) − 1 → CAGR ≈ 12%
₹5L to ₹10L in 5 years
CAGR = (2)^(1/5) − 1 → CAGR ≈ 14.87%
Related Calculators
Frequently Asked Questions
What is CAGR?
The constant annual rate at which an investment would grow from start to end value over a period.
CAGR vs average return?
CAGR accounts for compounding. Simple average return can overstate performance.
Can CAGR be negative?
Yes, if the final value is less than the initial investment.
Free calculator?
Use our CAGR Calculator on CalculatorWorld.
Limitations?
CAGR ignores volatility and assumes steady growth — actual paths vary year to year.