The annual growth rate of an investment in a specific period of time.
computing method
Announce
edit
Total growth ratepercentageThe root of n equals to the number of years in the relevant period.
formula
Announce
edit
(Current value/basic value) ^ (1/year) - 1
CAGR = (Ending Value/Beginning Value)^(1/# of years)-1
explain
Announce
edit
CAGR is not equal to the GR (Growth Rate) value in reality. It describes the purpose of investmentRate of returnConvert to a more stableReturn on investmentExpected value obtained.We can think that CAGR smoothes the return curve and will not be lost due to the huge changes in short-term returns.
The annual growth rate is a short-term concept. From the perspective of the development of a product or industry, the annual results may change greatly due to the growth or outbreak period. However, if measured by the compound growth rate, because it is calculated on a long-term basis, it can better explain the potential and expectation of the growth or change of the industry or product.
