What Does CAGR Stand For?


Quick Answer

The acronym CAGR stands for Compound Annual Growth Rate, which is a business term used in the analysis of a company's investment performance. The CAGR measures the annual average rate of increase, such as the value of a quantity, over a specified number of years.

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Full Answer

The CAGR is often used by business firms as a reference for their annual return of investments. It is a method of smoothing out returns by assuming that investments increase at a constant rate which, in reality, fluctuate. The CAGR is computed using the formula CAGR = (ending value / starting value)1 / number of years - 1.

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