compound growth rate


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Related to compound growth rate: CAGR

Compound growth rate

Compound Annual Return

The average year-on-year growth rate of an investment over a number of years. While investments usually do not grow at a constant rate, the compound annual return smoothes out returns by assuming constant growth. This makes accounting for the investment tidier. It is calculated as:

Compound annual return = (Ending Value / Beginning Value)^((1 / n) - 1) where n is the length of time of the investment in years. It is also called the compound annual growth rate. See also: Average Annual Growth Rate.

compound growth rate

The percentage rate, generally stated on an annual basis, at which a variable grows adjusted for compounding. For example, a 7% compound growth rate for ten years results in $100 growing to slightly less than $200. Without compounding, the $100 would earn $7 per year and grow to only $170. Financial analysts frequently use historical and projected compound growth rates in analyzing earnings, sales, and dividends.
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53 per share in 2005 for a 30-year annual compound growth rate of 13.
ABI Research recently reported a 5-year compound growth rate for Sarantel's addressed markets in excess of 40% per year.
Online advertising revenue in Asia-Pacific is expected to rise by a compound growth rate of about 40% in the next five years, according to research firm International Data Corp (IDC).
Specifically, its revenues and profits have more than quadrupled and its stock value has grown at a 30% compound growth rate over the last six years.
For the period ended December 31, 2003, the company's 10-year average annual compound growth rate in dividends was 5%.