# Calculate CAGR in Excel

With this article, you can learn how to calculate CAGR, the Compound Annual Growth Rate, in Excel. The Compound Annual Growth Rate is the year-over-year growth rate of an investment over a specified period of time. It is calculated by taking the nth root of the total percentage growth rate, where n is the number of years in the period being considered. The formula for CAGR is [(Ending Value/Beginning Value)^(1/(# of years))]-1.

CAGR isn't the actual return in reality. It's an imaginary number that describes the rate at which an investment would have grown if it grew at a steady rate. You can think of CAGR as a way to smooth out the returns.

## Steps

1. Open Microsoft Excel. Either click on the green X icon on the dock or opening it from the Applications folder in Microsoft Office.
2. Open a New Workbook.
• Enter to cell A1 the label, CAGR
• Enter to cell B1 the label, Ending_Value
• Enter to cell C1 the label, Beginning_Value
• Enter to cell D1 the label, _1_OverYears
• Enter to cell E1 the label, Years
• Enter to cell F1 the label, _1
4. Highlight columns B:F and select Insert from the top menu. Click Names > Create and choose Top Row
5. Enter the formulas and values:
• Enter to cell A2 an = and then the formula ((Ending_Value/Beginning_Value)^(_1_OverYears))-_1
• Enter to cell B2 the Ending Value of the investment, e.g. 23,512
• Enter to cell C2 the Beginning Value of the investment, e.g. 14,500
• Enter to cell E3 the number of Years the investment was outstanding up to the Ending Value, e.g. 3
• Enter to cell D3 an = and then the formula, 1/Years.
• Enter to cell F3 the value, 1