Compound Annual Growth Rate (CAGR)

Definition:

A year-over­year measurement of growth in the value of an investment. It is useful for comparing the growth of different investments because it reduces the effect of volatility and provides an annualized measure of growth (although actual growth may not have been reflected in the calculated CAGR value in any given year of the period for which CAGR is calculated).

The formula for calculating CAGR is ((Current Value/Base Value)^(1/Number of Years)) - 1.

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