What is CAGR and Its Formula?
CAGR is a useful measure of growth over multiple time periods. It represents one of the most accurate ways to calculate and determine returns for anything that can rise or fall in value over time. It is especially useful for comparing the growth rates of different investments or business metrics over time. Definition: CAGR is the mean annual growth rate of an investment over a specified period of time longer than one year. It represents one of the most accurate ways to calculate and determine returns for anything that can rise or fall in value over time. Formula: The formula for CAGR is: CAGR = ( Ending Value Beginning Value ) 1 n − 1 \text{CAGR} = \left( \frac{\text{Ending Value}}{\text{Beginning Value}} \right)^{\frac{1}{n}} - 1 CAGR = ( Beginning Value Ending Value ) n 1 − 1 Where: Ending Value is the value of the investment at the end of the period. Beginning Value is the value of the investment at the start of the period. n is the number of years. ...