compound growth rate的意思|示意

Compound growth rate, also known as compound annual growth rate (CAGR), is a term used to describe the return rate of an investment over a certain period of time. The rate of return on an investment that is compounded annually over the period of the investment is known as the compound growth rate.

The formula used to calculate compound growth rate is simple:

CGR = (Current_Value/Starting_Value)^(1/Years_Invested) - 1

For example, if you invested $1,000 in an account that earns a 10 percent compound growth rate annually, after one year, your investment would be worth $1,100 ($1,000 * 1.10).

After two years of the same growth rate, your investment would be worth $1,210 ($1,100 * 1.10). After five years, it would be worth $1,610 ($1,100 * 1.51).

The power of compounding growth rates is that the rate of return compounds on itself from year to year. This means that the higher your returns in a given year, the higher your returns will be compounded in the following year as your principal grows from the original investment.

For example, if you invested $1,000 in an account that earns a 10 percent compound growth rate annually for 5 years, you would have a total return of 61 percent, despite earning only 10 percent annually.

The compound growth rate is often used in business to compare the performance of different investments, to measure the performance of a business over a period of time, or to measure the return of a single investment over a period of time.

It is also worth noting that compound growth rate is different than compound interest or annual interest rate. While the two terms are often used interchangeably, the compound growth rate is a measure of the return on an investment over a period of time, while compound interest and annual interest rate are types of interest paid on a loan or deposit.