Small Business Dictionary

Compound Annual Growth Rate (CAGR)

Compound Annual Growth Rate (CAGR) is a term used for year-over-year annualized growth of an investment over a specific time period. Compound Annual Growth Rate (CAGR) is most often used to compare the increase in value of two investments. CAGR is calculated by taking the nth root of the total percentage growth rate, with “n” as the number of years being compounded.