cagr Archives - Fairmont Equities

What does the compound annual growth rate (CAGR) mean?

March 9, 2023 by Lauren Hua

Investors looking to measure the return of their investment may use the CAGR. It is a useful tool to find the average yearly growth of the investment. It is based on the assumption that earnings are reinvested. The absolute annual return does not take into account the compounding, so the CAGR is a more accurate way to calculate yearly returns as it reflects the consistent rate at which the asset has grown. Formula to calculate CAGR Example: Let’s use an …

How do you calculate the compound annual growth rate (CAGR)?

March 25, 2021 by Lauren Hua

Investors looking to measure the return of their investment may find using CAGR a good tool to find the average yearly growth of this investment. It is base of the assumption that earnings are reinvested. The absolute annual return does not take into account the compounding so the CAGR is more accurate way to calculate yearly returns as reflects the consistent rate at which the asset has grown. Formula to calculate CAGR Example: Let’s use an example where you have …