Compound Growth (CAGR)

Calculates the compound annual growth rate implied by a beginning value, a target ending value, and a number of years, and contrasts the small early-year gains with the larger late-year gains the same rate produces. Inputs are the beginning value, the ending value, and the number of years.

Interactive Tool

Beginning value

Ending value (target)

Number of years

CAGR

17.5%

constant annual rate

Total growth

5.0×

end ÷ begin

First-year gain

$6,985

same rate, small base

Final-year gain

$29,732

same rate, larger base

The late-year acceleration is not better performance, it is the same 17.5% rate on a larger base. Straight-line intuition would add about $16,000 every year; compounding back-loads the dollars.

Learn the concept

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

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