In Excel: put your start and end values and the number of years into =(End/Start)^(1/Years)-1, then format the cell as a percentage.
On this page7
Put the starting value, ending value and number of years in their own labelled cells.
In a blank cell type =(End/Start)^(1/Years)-1, clicking each cell where the names appear.
Press Enter, then format the result cell as a percentage with one or two decimals.
Drag the formula across columns to compare several investments side by side.
What this does
CAGR smooths a multi-year change into one annual rate — the constant rate that would carry the starting value to the ending value over the period. It strips out the noise of bumpy year-to-year swings so two investments over different horizons can be compared on equal footing. Because it is a geometric mean of growth, it is the honest way to summarise compounding, where a simple average would overstate the return. Keep the inputs visible and clearly labelled and the whole thing stays auditable — anyone who opens the file later, including you, can see at a glance exactly what feeds the result and change one assumption without hunting through the formula. The difference between a quick fix and a sheet you can trust is the extra minute you spend validating “growth rate formula excel”. Start on a copy or a tiny sample, keep the affected formula visible, and compare the result with the outcome you expected before you touch the real workbook. When a formula is involved, keep the inputs labelled beside it, reference cells instead of typing values, and apply number formatting only after the result checks out. The point is a calculation you can defend to a CFO or an auditor, but the practical win is that someone else can open the file and understand what happened without asking you.
A worked example
Say a fund grew from €10,000 to €19,672 over 10 years. Enter =(19672/10000)^(1/10)-1 and format as a percentage: the result is 7.0%. That single figure means the fund effectively earned 7% every year, compounded — even though the real path was lumpier. Change the ending value to €25,000 and the rate jumps to 9.6%, which is exactly what the live chart above redraws as you type. Reach for CAGR whenever you need to compare growth over different time spans or report a single, defensible annual figure to a board or client. It is the standard language of investment and revenue reporting precisely because it is comparable and hard to game. Check the referenced cells, argument order and result type in your workbook. Start with the worked example before changing an input, then compare the changed result with the calculation you expected. An error value or a result of a different type is a reason to inspect the inputs and arguments.
In Google Sheets
Google Sheets support for this task has not been verified. Check the function, arguments and workflow in the target product before transferring the example. Matching formula notation does not establish identical behaviour. Keep this page bookmarked for the next time the same question comes up. Better still, repeat the steps once in your own workbook — doing it yourself is what turns a copied answer into something you remember. For “growth rate formula excel”, keep the input cells and the result visible while you check the formula in Excel. Follow the worked example and change one input at a time. The steps explain the workbook calculation; this page does not run a live calculator for that task.
Common mistakes
- Using a simple average of yearly returns — it overstates compounded growth; CAGR is the geometric rate.
- Counting the wrong number of years (use elapsed years, not the count of data points).
- Feeding a zero or negative starting value, which makes the ratio meaningless.
- Leaving the cell as a raw decimal (0.07) instead of formatting it as 7%.
Frequently asked questions
What is a good CAGR?
It depends on the asset class: broad equity indices have historically returned roughly 7–10% nominal CAGR, but the right benchmark is whatever a comparable, equally risky alternative would return.
Does CAGR account for volatility?
No. It describes the smoothed end-to-end rate and deliberately ignores the path, so two very different risk profiles can share the same CAGR. Pair it with standard deviation to see the risk.
Can CAGR be negative?
Yes — if the ending value is below the starting value the rate is negative, telling you the position lost an average of that much each year.
Other ways people ask this
On the way here you may have searched this as “formula for growth rate in excel” and “excel formula growth rate” — it is all the same task, and this page is the single, complete answer to it.
Why do people search for this in so many different ways?
Because the same task has many names. “formula for growth rate in excel”, “excel formula growth rate” all point at the one operation explained on this page, which is why they all lead here.