What is Compound Annual Growth Rate (CAGR)?

The Compound Annual Growth Rate (CAGR) is the rate of return of an investment over a specified period of time as denoted by using an annual percentage. The CAGR is expressed by using this formula: CAGR = (EB/BB)^(1/N) - 1, where: EB = Ending balance BB = Beginning balance N = Number of years