Investment appraisal

Compound annual growth rate (CAGR) calculator

CAGR smooths a lumpy multi-year change into a single annual rate, which is why every investor deck and information memorandum quotes it.

Inputs

Result

CAGR

17.92%

Total growth
93.33%
Absolute change
USD 700,000
Doubling time (rule of 72)
4 years
Projected value in 3 years
USD 2,377,554.13
  • Publish the year-by-year figures alongside any CAGR — buyers will ask for them anyway.

How to use this calculator

  1. 1Enter the beginning value and the ending value.
  2. 2Enter the number of years between them.
  3. 3Optionally project forward at the same rate.

The formula and its blind spot

CAGR = (ending / beginning)^(1/years) − 1. It treats growth as if it happened evenly, which hides volatility entirely: a business that fell 40% then recovered can show the same CAGR as one that grew steadily.

Always show the underlying year-by-year figures next to a CAGR in any document a buyer will read. Concealed volatility discovered in due diligence costs far more than disclosing it upfront.

Using CAGR in valuation

Historic revenue and EBITDA CAGR are the standard inputs for forecast growth in a DCF. Buyers usually haircut the historic rate, on the basis that growth decays as a base gets larger.

The rule of 72 gives a quick check: divide 72 by the CAGR to get the approximate doubling time in years.

Call this tool from the API

Every calculator on this site is also an endpoint. Get a free key from the developer page and call it from your product, spreadsheet or AI agent.

curl -X POST https://utopiavalue.co/api/v1/tools/cagr-calculator \
  -H "Authorization: Bearer $UTOPIA_API_KEY" \
  -H "Content-Type: application/json" \
  -d '{"beginningValue":750000,"endingValue":1450000,"years":4,"projectYears":3,"currency":"USD"}'

Frequently asked questions

Can CAGR be negative?

Yes. A declining business has a negative CAGR, which is a legitimate and important input to a forecast.

How many years should I measure?

Three to five. Shorter periods are noisy; longer ones include structurally different trading conditions.

Is CAGR the same as average growth?

No. The arithmetic average of annual growth rates is always higher than CAGR when growth is volatile.