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Compound Growth Rate

   Also found in: Acronyms 0.01 sec.
Compound growth rate
See: Compound Annual Growth Rate
compound growth rate
The percentage rate, generally stated on an annual basis, at which a variable grows adjusted for compounding. For example, a 7% compound growth rate for ten years results in $100 growing to slightly less than $200. Without compounding, the $100 would earn $7 per year and grow to only $170. Financial analysts frequently use historical and projected compound growth rates in analyzing earnings, sales, and dividends.
Compound Growth Rate
Average, year-on-year growth rate of an investment over a number of years. While investments usually do not grow at a constant rate, the compound annual growth rate smoothes out returns by assuming constant growth. This makes accounting for the investment tidier. It is calculated as:

CAGR = (Ending Value / Beginning Value)^((1 / n) - 1) where n is the length of time of the investment in years. It is also called a compound annual growth rate. See also: Average Annual Growth Rate.


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This is a very active residential real estate market and based on the compound growth rate of almost 8% over the past seven years, the trend is likely to continue.
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By the end of his six-year tenure in 2001 the exchange was a new place, achieving a compound growth rate of 80-plus percent, increased productivity of at least 50 percent, and 15 times as many seats on the exchange.
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When you hear CNBC talking about the compound growth rate of a stock they mean the exponential rate of growth over several years.
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