(CAGR)Compound annual growth rate 

CAGR is a term for the geometric progression ratio that provides a constant rate of return.

Formula and Calculation of CAGR
Where 
V(final) is the end(final) value,
V(begin) is the initial value
t is the number of years.

For example 
If xyz company has a profit for last few financial year are like 

Year             profit
2016            20000
2017            26000
2018            27000
2019            31000
 Then
CAGR =(31000/20000)^1/3 -1
           =(1.55)^1/3-1
           =0.157
           =15.7%

CAGR is one of the most accurate ways to calculate and determine returns for anything that can rise or fall in value over time.

Investors can compare the CAGR of two alternatives in order to evaluate how well one stock performed against other stocks in a peer group or against a market index.

CAGR does not reflect investment risk.

Comparing CAGRs of business activities across similar companies will help evaluate competitive weaknesses and strengths. 

These are CAGR applications:

Calculating and communicating the average returns of investment funds.

Demonstrating and comparing the performance of investment advisors

Comparing the historical returns of stocks with bonds or with a savings account or FD


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