Compound growth rate 


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Compound growth rateSee: Compound Annual Growth RateCompound growth rate Similar MatchesCompound Annual ReturnCompound Annual ReturnSee: Compound Annual Growth Rate Compound Annual Growth RateCompound Annual Growth RateBest defined by example. If you invest $100 today and make 5% in the first year and reinvest ($105) and make 8% in the second year, the compound annual growth rate is 6.489%. The calculation is $100x1.05x1.08=$113.4 which is what you end up with at the end of year two. The average return is [square root(113.4/100) 1]= 0.06489 or 6.489%. Note 1. If we had three compounding periods we would take the cubic root (power of 1/3). Note 2. If we had invested at exactly 6.489 in both periods, we get $100x1.06489x1.06489=$113.4. Note 3. The example is directed to a return  but CAGR could be applied to earnings growth, GDP growth, etc. Simple compound growth methodSimple compound growth methodCalculating a growth rate by relating terminal value to initial value and assuming a constant percentage annual rate of growth between the two values. Compound annual growth rateCompound annual growth rateThe average rate at which a particular financial parameter compounds up over a period of years. Realized compound yieldRealized compound yieldYield assuming that coupon payments are invested at the going market interest rate at the time of their receipt and held thus until the bond matures. Further SuggestionsCompoundingCompound interest Compounding period Compound interest Compounding frequency Compound option Discrete compounding compound interest compound reversionary bonus Continuous compounding Compound tariff 
