What Is CAGR?
It is the geometric mean of the yearly growth factors, minus one.
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1.What is the CAGR?
It is the geometric mean of the yearly growth factors, minus one.
2.Why do percent changes not add up?
Up 40 percent means multiply by 1.4 and down 30 percent by 0.7, and 1.4 times 0.7 is 0.98.
3.100 rises 40 percent, then falls 30 percent. Where does it end?
After year one 140, then 98; the plain average of plus 5 a year would suggest 110.25.
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Sources (2)
- Compound annual growth rate (Wikipedia, englisch)
- Eigene Rechnung: synthetische Wachstumsbeispiele
Education only. Not financial advice.