CAGR Calculator
Calculate the Compound Annual Growth Rate (CAGR) between an initial value and a final value over a given period.
- CAGR
- 19.14%
- Absolute gain
- PKR 700,000
- Total return
- 140.00%
Formula
CAGR = (Final Value / Initial Value)^(1 / Years) − 1
In plain language: CAGR answers the question “what constant annual growth rate, applied every year, would take the initial value to the final value over this many years?” It smooths out year-to-year volatility into a single average annual rate, which makes it useful for comparing investments over different time periods — but it does not describe the actual path the investment took to get there.
Educational information only
This calculator provides estimates for educational purposes only. Results are based on the assumptions you enter and are not guaranteed, not a forecast, and not personalized financial or investment advice. Actual investment returns vary and may be negative. Consider speaking with a licensed financial advisor before making investment decisions.
Assumptions & methodology
CAGR is calculated as (Final Value ÷ Initial Value)(1 ÷ Years) − 1, expressed as a percentage. It represents the constant annual rate that would connect the initial and final values over the given period, smoothing out actual year-to-year fluctuations into a single average.
Example use case
If an investment grew from PKR 500,000 to PKR 1,200,000 over 5 years, CAGR tells you the single constant annual growth rate that explains that change — useful for comparing this investment's pace of growth against another investment or benchmark over a different time period.
Limitations
- CAGR is a smoothed average and does not reflect actual volatility or drawdowns along the way.
- Does not account for additional contributions or withdrawals during the period — it assumes a single initial and final value.
- Past CAGR does not predict future performance.