Calculate the Compound Annual Growth Rate (CAGR) between a beginning and ending value over any number of years, plus an optional forward projection at the same rate.
📂 Business & TradeEnter the beginning value, the ending value, and the number of years between them, then press the button to see the CAGR and total growth instantly. If you also want to see a rough future projection, enter a number of years to project forward — this is optional and can be left blank. No sign-up required, and no data is sent anywhere — everything is calculated right in your browser.
The Compound Annual Growth Rate (CAGR) is the single, constant annual rate that, if applied every year for the whole period, would take a beginning value and grow it into the ending value you actually observed. It is one of the most widely used measures for describing growth in investments, business revenue, company earnings, and even things like population or website traffic, because it compresses a multi-year change into one easy-to-compare number. CAGR is calculated as (Ending Value ÷ Beginning Value) raised to the power of (1 ÷ Number of Years), minus 1, expressed as a percentage. Unlike a simple average of yearly percentage changes, CAGR reflects the true compounding path between the two values, which makes it the fairer way to compare growth across investments, businesses, or time periods of different lengths. This calculator also lets you optionally project the ending value forward by additional years at the same CAGR, to get a rough sense of where that growth rate would lead if it continued — a useful starting point for forecasting, though real-world growth is rarely perfectly steady.
Whenever someone wants to describe how much something grew over several years — an investment portfolio, a company's revenue, a country's GDP, or even the price of a house — a single, standardized number is far more useful than a list of year-by-year percentage changes. That standardized number is almost always the Compound Annual Growth Rate, or CAGR, and understanding how it works (and what it doesn't tell you) is essential for interpreting growth figures correctly.
The CAGR formula is straightforward: take the ending value, divide it by the beginning value, raise that ratio to the power of one divided by the number of years, and subtract one. The result is the constant annual growth rate that, compounding every single year, would carry the beginning value all the way to the ending value over the stated period. For example, an investment that grows from $10,000 to $16,000 over 5 years has a CAGR of about 9.86% — meaning if it had grown by exactly 9.86% every single year, compounding, it would land on the same $16,000 final figure.
A common point of confusion is the difference between CAGR and a simple average of yearly returns. If an investment gains 50% in year one and loses 50% in year two, a naive average would suggest a 0% return — but the investment actually lost money overall, since a 50% gain followed by a 50% loss leaves you with only 75% of the starting value. CAGR correctly captures this by using a geometric mean rather than an arithmetic one, which is precisely why financial analysts, business owners, and investors rely on CAGR rather than simple averages when comparing growth over multiple years.
CAGR is also the standard tool for comparing two investments or two businesses that grew for different lengths of time or by different total amounts. A revenue increase of 40% over 3 years and a revenue increase of 65% over 5 years cannot be compared directly as raw percentages, but converting both to CAGR (about 11.9% and 10.5% per year respectively) puts them on the same annualized footing, revealing which one actually grew faster on a year-by-year basis.
It is important to remember what CAGR does not capture: it smooths out all of the actual year-to-year ups and downs into one tidy average figure. Two companies or investments can have an identical CAGR while one grew slowly and steadily and the other swung wildly between strong years and weak ones before landing at the same final value — meaning CAGR alone says nothing about volatility or risk along the way. It is also a backward-looking, historical measure; using it to project future growth (as the optional forward-projection field in this tool does) is a reasonable estimate only if the same underlying conditions are expected to continue, and should always be treated as a rough guide rather than a guarantee.
CAGR (Compound Annual Growth Rate) is the constant yearly rate that would grow a beginning value into an ending value over a given number of years, assuming growth compounds every year. It is calculated as (Ending Value ÷ Beginning Value) raised to the power of (1 ÷ Number of Years), minus 1.
A simple average adds up each year's percentage return and divides by the number of years (an arithmetic mean), which can be skewed by a single very good or very bad year. CAGR is a geometric mean that reflects the actual compounding path from the beginning value to the ending value, which is why it is usually the more accurate measure of true growth.
Yes. If the ending value is lower than the beginning value, CAGR will be negative, showing the constant annual rate at which the value declined over the period.
It is optional. If you enter a number of additional years, the calculator applies the CAGR you just calculated to the ending value to estimate what it could grow to that many years further into the future, assuming the same annual growth rate continues.
Mathematically the formula is the same compounding idea, but CAGR is a smoothed, after-the-fact summary of how a value actually changed — it is not a guaranteed or contractual rate, since real growth is usually uneven from year to year.