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.
Forum discussions about the Compound Annual Growth Rate. Below you can ask a question about this topic, share your experiences, report a new development, or explain something.


The best, toprated topics about the Compound Annual Growth Rate. Here you will find the most valuable ideas and practical suggestions.


Advanced insights about the Compound Annual Growth Rate. Here you will find professional advices by experts.

7 Limitations of CAGR Applying CAGR to Assess the Quality of a Firm's Management Compound Annual Growth Rate (CAGR) is a number which provides an average yearly growth rate for an investment over time....



Various sources of information regarding the Compound Annual Growth Rate. Here you will find powerpoints, videos, news, etc. to use in your own lectures and workshops.

CAGR Calculator Calculate CAGR Simple CAGR calculator...


CAGR Diagram Calculate the Growth Rate of Investments Download and edit this 12manage PowerPoint graphic for limited personal, educational and business use.
Republishing in ...


CAGR: How to Calculate with a Calculator Using a Calculator to Find the CAGR Step by step explanation of how to use a calculator to calculate the CAGR ....


CAGR: How to Calculate in MS Excel Calculating CAGR with Excel Explanation of how to calculate the Compound Annual Growth Rate in Microsoft Excel....



Jump to further research sources regarding the Compound Annual Growth Rate.
News

Videos

Presentations


Books

Academic

More




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


Do you know a lot about the Compound Annual Growth Rate? Become our SIG Leader and gain worldwide recognition as an expert.



