# How to calculate CAGR in Excel

Divide the end value by the start value, raise it to 1 over the number of years and subtract 1: `=(B6/B2)^(1/(A6-A2))-1`.

**Excel:** `=(B6/B2)^(1/(A6-A2))-1` (Every current version)

**Google Sheets:** the same formula works.

## Example

Sample data (row 1 is the header):

| A | B | C | D |
| --- | --- | --- | --- |
| Year | Revenue |  | CAGR |
| 2021 | 1250000 |  |  |
| 2022 | 1410000 |  |  |
| 2023 | 1525000 |  |  |
| 2024 | 1780000 |  |  |
| 2025 | 1940000 |  |  |

Formula in E1: `=(B6/B2)^(1/(A6-A2))-1`

Result: 11.62%

## How it works

Revenue grew by a factor of 1.552 over four years. CAGR is the steady yearly rate that gives the same growth: the fourth root of 1.552, minus 1, is 11.62%. The number of years is the gap between the first and last year, 4, not the count of rows, 5.

## Other ways

- `=RATE(A6-A2,0,-B2,B6)`: RATE finds the same yearly rate from the start and end values.
- `=(B6/B2)^(1/(ROWS(B2:B6)-1))-1`: Counts the years from the rows, for a list without a year column.

## Common mistakes

- Using 5 years (the number of values) instead of 4 (the gaps between them) understates growth.
- CAGR ignores the path: a big drop and recovery give the same CAGR as steady growth.
- A negative or zero start value can't be raised to a power; CAGR doesn't apply.

## Questions

**Is CAGR the same as the average growth rate?**

No. The average of the yearly changes is higher than CAGR when growth varies. CAGR is the rate that actually reproduces the end value.

**Is there a CAGR function?**

RRI returns it in Excel: `=RRI(A6-A2,B2,B6)`.

Every formula and result on this page was checked by running it in the Spreadsheet Practice formula engine on 2026-10-30.

Source: https://spreadsheetpractice.com/formulas/calculate-cagr