How to Calculate CAGR in Excel
Three formulas, one result — with examples and common fixes
You can calculate CAGR in Excel using the POWER function, the RATE function, or a manual formula. Each method gives the same result; choose the one that fits your worksheet.
Three Ways to Calculate CAGR in Excel
POWER function
=POWER(FV/PV, 1/n)-1=POWER(20000/10000, 1/5)-1 returns 0.1487 or 14.87%
Manual formula
=(FV/PV)^(1/n)-1=(20000/10000)^(1/5)-1 returns 0.1487 or 14.87%
RATE function
=RATE(n, 0, -PV, FV)=RATE(5, 0, -10000, 20000) returns 0.1487 or 14.87%
Full Worked Example
Here is a complete example you can copy into Excel.
| Input | Value |
|---|---|
| Initial Value (PV) | $10,000 |
| Final Value (FV) | $20,000 |
| Years (n) | 5 |
| CAGR | 14.87% |
Common Errors & How to Fix Them
#NUM! error with RATE
Cause: PV was not entered as a negative number.
Fix: Use =RATE(n, 0, -PV, FV) with a minus sign before PV.
Result looks too small
Cause: The cell is not formatted as a percentage.
Fix: Select the cell, then Home → Number → Percentage.
Monthly data gives wrong CAGR
Cause: n was entered in months but the result was not annualized.
Fix: Use n in years, or multiply the monthly result by 12.
Result is 100x too large or small
Cause: Percentage formatting is missing or applied twice.
Fix: Check the cell format and whether you already multiplied by 100.
When to Use XIRR Instead
If your data includes monthly contributions, dividends, or irregular dates, use =XIRR(values, dates) instead of CAGR. XIRR handles cash flows that happen on any date.
Frequently Asked Questions
The most common formulas are =POWER(FV/PV, 1/n)-1 and =RATE(n, 0, -PV, FV).
Enter PV, FV, and n=5, then use =POWER(FV/PV, 1/5)-1.
RATE requires PV to be negative because it represents a cash outflow.
Use XIRR. CAGR assumes a single initial and final value, while XIRR handles multiple contributions.
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