What is CAGR?
By
Research Desk
about 11 years ago
CAGR stands for compounded annual growth rate. It is the measure of change over a period of time, effectively compounding the base value every year, at that rate. Simply put, it means the compound rate at which the amount has grown during the period under consideration.
| Date | Year | Value (Rs.) |
| 1st Jan 2005 | 0 | 100 |
| 1st Jan 2006 | 1 | 124 |
| 1st Jan 2007 | 2 | 186 |
| 1st Jan 2008 | 3 | 245 |
| 1st Jan 2009 | 4 | 340 |
| 1st Jan 2010 | 5 | 400 |
The CAGR for the above 5 year period from 1st Jan 2000 to 1st Jan 2005 will be
= (400 / 100) ^ (1/5) -1
= 32.0%
This means, Rs. 100 has given a return of 32% compounded every year.