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Compound Annual Growth Rate

Compound Annual Growth Rate - CAGR

(source http://www.investopedia.com/terms/c/cagr.asp)

The year over year growth rate of an investment over a specified period of time.

Calculated by taking the nth root of the total percentage growth rate where n is the number of years in the period being considered.

This can be written as: (Current Value/Base Value)^(1/# of years) - 1.

CAGR doesn't represent reality. It's an imaginary number that describes the rate at which an investment grew as though it had grown at a steady rate.


Last edited on Sunday, January 12, 2003 at 18:54:45 pm.