Talk:Compound annual growth rate
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[edit] Propose to redirect this to rate of return which I will be editing
The calculation given here is only the standard Future Value of a Dollar. This is covered at the site time value of money and the detailed sites referenced from there. The calculation will only work if there is only one cash flow at the beginning of the investment. The discussion paragraphs I believe to be wrong. I don't know how long I should wait for your input before acting. If there is a 'norm' let me know. Any other thoughts? --Retail Investor 20:25, 8 September 2006 (UTC)
- I really don't have a clue about the different methods of calculation. But neither rate of return nor time value of money mention the term "compound annual growth rate" or "CAGR". I just looked up the term, but didn't find a explanation. From a user view i hardly care about the lemma i'm redirected to - as long as i find a definition of the term i looked for. Could you maybe fill this gap? --Zinnmann 10:34, 7 November 2006 (UTC)
I asked the people at rate of return if they would allow an edit. They said no. I edited Time value of money and Compound interest but did not include any reference to CAGR because I personally have never heard the term used. Judging from all the other pages that covered the same topic, using different terms, the concept goes by many monikers. Since you know where and how CAGR is used, why don't you go ahead and provide the appropriate reference in the appropriate page.Retail Investor 02:33, 8 November 2006 (UTC)
- I'm sorry, but in fact I don't know, what CAGR is. I stumbled across it in a business spreadsheet and needed some background information. There's a short sub-article at de:Wachstumsrate#Compound Annual Growth Rate. I'll try a translation but can't guarantee the correctness - neither factual nor grammatical :-) So, if you think that it's nonsense, please put in a VfD. On the other hand: what's wrong about the version [1] you have replaced with that redirect? --Zinnmann 15:21, 8 November 2006 (UTC)
You can see what I think wrong with the entry at the top of this page.Retail Investor 18:08, 10 November 2006 (UTC) Since you insist on having this page (even though you say you don't understand it), I have corrected it. If anyone else wants to redirect it, go ahead.Retail Investor 16:58, 23 November 2006 (UTC)
CAGR is the geometric mean of an investment. It is not the future value of a dollar and it is not intended to evaluate cashflows, but only the geometric growth rate of an investment. The resultant Compound Annual Growth Rate is the singular rate at which an investment would grow every period. Alternately, what rate would a defined present value have to grow by to reach a defined future value over a defined period.
For example, an investment may have the following periodic values: 100, 120, 115, 95, 120 for corresponding periodic rates of return of 20%, -4.17, -17.39, 26.32 and an arithmetic average return of 6.21%. The geometric return is 4.67% effectively saying that the periodic values would be 104.67, 109.56, 114.67, 120.03 (rounding). The CAGR helps mitigate volatility in the values of the investment and levels out the return statistics to allow for more direct comparisons between different investments. I will correct the errors. —Preceding unsigned comment added by 192.250.34.161 (talk) 21:07, 20 March 2008 (UTC) sorry forgot to sign! 192.250.34.161 (talk) 21:08, 20 March 2008 (UTC)WSJevons
[edit] Problem in the lead equation?
I'm not a math wiz, just stumbled on this page trying to calculate an annual growth rate, but should the equation read 1/t_n - t_0 ? Instead it reads 1/t-t_0. "t-t_0" is not listed in the legend explaining the various factors. Budgy Speedwagon (talk) 18:26, 2 May 2008 (UTC)
