What is the Compound Annual Growth Rate?
The compound annual growth rate is a financial calculation that makes it possible to determine the average year over year growth rate of an investment. The compound growth rate is often used to ensure that the return on a given investment is following a favorable trend. At the same time, the CAGR can be a means of identifying a downward trend that could make it wise for the investor to sell off the investment before the current value drops below the initial base value or purchase price. Figuring a compound growth rate is based on determining the number of years that will be used in the calculation. For example, if an investor wishes to calculate the growth rate for a five year period, the base value for the most distant year serves as what is known as the starting value. The base value for the most recent year under consideration serves as the ending value. In order to begin the process of calculating the compound growth rate, the ending value is divided by the starting value. This res
The compound annual growth rate is a financial calculation that makes it possible to determine the average year over year growth rate of an investment. The compound growth rate is often used to ensure that the return on a given investment is following a favorable trend. At the same time, the CAGR can be a means of identifying a downward trend that could make it wise for the investor to sell off the investment before the current value drops below the initial base value or purchase price.
The compound annual growth rate is a financial calculation that makes it possible to determine the average year over year growth rate of an investment. The compound growth rate is often used to ensure that the return on a given investment is following a favorable trend. At the same time, the CAGR can be a means of identifying a downward trend that could make it wise for the investor to sell off the investment before the current value drops below the initial base value or purchase price. Figuring a compound growth rate is based on determining the number of years that will be used in the calculation. For example, if an investor wishes to calculate the growth rate for a five year period, the base value for the most distant year serves as what is known as the starting value. The base value for the most recent year under consideration serves as the ending value. In order to begin the process of calculating the compound growth rate, the ending value is divided by the starting value. This res
