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 …

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