How to Calculate the Compound Annual Growth Rate (CAGR) in Microsoft Excel

If you’re tracking an investment, such as a mutual fund, you may want to calculate CAGR (Compound Annual Growth Rate). In Microsoft Excel, you can easily do this using the RRI function or a manual formula.

1. Using the RRI Function

The RRI function calculates CAGR using the formula:

excelCopyEdit=RRI(periods, present_value, future_value)

Example Data

In this case:

• Number of periods (A7) = 5 years
• Present Value (B2) = 50
• Future Value (B7) = 400

Formula in Excel

excelCopyEdit=RRI(A7,B2,B7)

🔹 Alternative: You can use actual values instead of cell references:

excelCopyEdit=RRI(5,50,400)

📌 Tip: Format the result as a percentage by clicking the Percent Style button in the Home tab.

2. Manually Calculating CAGR

If you prefer, you can calculate CAGR using the formula:CAGR=(Future ValuePresent Value)1Periods−1CAGR = \left(\frac{\text{Future Value}}{\text{Present Value}}\right)^{\frac{1}{\text{Periods}}} – 1CAGR=(Present ValueFuture Value​)Periods1​−1

Excel Formula

excelCopyEdit=(B7/B2)^(1/A7)-1

This formula does the following:

1. Divides the future value by the present value.
2. Raises the result to the power of 1 divided by the number of periods.
3. Subtracts 1 to get the CAGR.

✅ Result: The manual formula will match the result from the RRI function.

Summary of CAGR Calculation Methods

Microsoft Excel is a powerful tool for tracking investments. Whether using the RRI function or calculating CAGR manually, you can quickly analyze your investment growth!

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