Financial Terms / C - D / Compound Annual Growth Rate (CAGR)

Compound Annual Growth Rate (CAGR)

The compound Annual Growth Rate (CAGR) is the annual growth rate of an investment over a specified period, usually more than a year, assuming that the profits accrued in each year are reinvested.

The formula for CAGR is:

CAGR = [( Ending Value / Beginning Value ) ^ ( 1/N)]-1

Where,

Ending value is the value of the investment at the end of the period

Beginning value is the value of the initial capital invested

N is the number of years that you stayed invested