What is CAGR? Description
Compound Annual Growth Rate is the average annual growth rate of an investment
over a specified period of time.
Calculation of Compound Annual Growth Rate. Formula
CAGR is calculated by taking the Nth root of the total percentage growth
rate where N is the Number of Years in the period being considered.
CAGR = ( ( End Value / Begin Value )^{(1 / N ) })  1
Usage of CAGR. Applications
 Calculating and communicating the average returns of investment funds.
 Demonstrating and comparing the performance of investment advisors.
 Compare the historical returns of stocks with Bonds or with a savings
account.
Strengths of CAGR. Benefits
 It is a useful formula to evaluate how various investments or a portfolio
has performed over time.
 Can be used for comparing and for evaluating the performance of one
stock against other stocks in a peer group or against a market index.
Limitations of CAGR. Disadvantages
 CAGR assumes that an investment grew at a steady rate. In reality there
is volatility: investment results can vary significantly over time. This
volatility, or investment risk, is important to consider when one makes
an investment decision.
 CAGR is a historical measure. Historical results are not always a reliable
indicator of expected returns in the future.
 CAGR is sensitive to the period which you consider and it can be easily
manipulated: an investment fund may tell you that it achieved an impressive
CAGR of 35% over the last three years, but the Begin Value may be taken
at a the lowest point that the fund ever had.
Assumptions of Compound Annual Growth Rate. Conditions
 CAGR assumes that an investment grows at a steady pace. This is normally
not the reality. Therefore CAGR is an imaginary conception. It describes
the growth of an investment as though it had grown at a steady pace.

CAGR Special Interest Group




CAGR Education & Events




7 Limitations of CAGR
Compound Annual Growth Rate (CAGR) is a number whi...
Usage (application): Applying CAGR to Assess the Quality of a Firm's Management









CAGR Calculator
Simple CAGR calculator...
Usage (application): Calculate CAGR






CAGR Diagram
Download and edit this 12manage PowerPoint graphic...
Usage (application): Calculate the Growth Rate of Investments






CAGR: How to Calculate with a Calculator
Step by step explanation of how to use a calculato...
Usage (application): Using a Calculator to Find the CAGR






CAGR: How to Calculate in MS Excel
Explanation of how to calculate the Compound Annua...
Usage (application): Calculating CAGR with Excel






News about Cagr Investment





News about Cagr Return





Videos about Cagr Investment





Videos about Cagr Return





Presentations about Cagr Investment





Presentations about Cagr Return





More about Cagr Investment





More about Cagr Return






Compare with CAGR: Return on Investment
 Net Present Value 
Discounted Cash Flow
Return to Management Hub: Finance & Investing
More Management Methods, Models and Theory



Special Interest Group Leader






