How is CAGR different from average annual growth rate?

Simple average growth ignores compounding and distorts volatile swings. CAGR measures true geometric annual compounding.

Updated: August 2026 • Verified v1.2

Compound Annual Growth Rate (CAGR) Calculator

Finance & MathPopular

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CAGR = (Ending_Value / Beginning_Value)^(1 / Years) - 1

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Understanding Your Results

Calculates the smoothed annual percentage growth rate, absolute dollar gain, total cumulative percentage growth, and year-by-year compounding trajectory schedule.

Practical Guidance & Next Steps

CAGR provides a smoothed geometric annual growth rate, eliminating the distortion of volatile single-year swings.

What is this?

A financial metrics calculator that computes the geometric annual growth rate of an investment or business over multiple years.

How does it work?

1. Enter Beginning (Initial) Value. 2. Enter Ending (Final) Value. 3. Enter Number of Years to view CAGR %, total gain, and year-by-year compounding trajectory.

Why use it?

Standardizes financial performance metrics across different time horizons and investment sizes.

Technical Scope & Calculation Limitations

Calculates geometric constant annual growth. Real-world business growth fluctuates across quarters.

Frequently Asked Questions

CAGR (Compound Annual Growth Rate) represents the annualized rate of return required for an investment or business metric to grow from its beginning balance to its ending balance.

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