Compound Annual Growth Rate (CAGR)

Calculates the compound annual growth rate between a beginning and an ending value, alongside total growth and the naive linear average for comparison. Inputs are the beginning value, the ending value, and the number of annual periods.

Interactive Tool

Inputs

Beginning value

Ending value

Number of annual periods (n)

Count periods, not labels: Year 1 to Year 5 is 4 periods, not 5.

CAGR

4.4%

($570,000 ÷ $480,000)^1/4 − 1

Total growth

18.8%

over the full period

Naive linear average

4.7%

total ÷ n, ignores compounding

CAGR smooths the path, two properties with the same CAGR can have very different year-to-year volatility, so always review the individual years.

Learn the concept

This calculator comes from the free Real Estate Finance course, where the concept is taught with readings, worked examples, and practice questions.

Open Real Estate Finance

Built by Devon Coombs, CPA, MBA, Teaching Professor of Finance at Santa Clara University.