what is the meaning of
annual growth rate
Answers
Explanation:
The AAGR measures the average rate of return or growth over a series of equally spaced time periods. As an example, assume an investment has the following values over the course of four years: Beginning value = $100,000. End of year 1 value = $120,000..
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Explanation:
Question :-
- what is the meaning of annual growth rate
Answer :-
Average Annual Growth Rate (AAGR) Definition - Investopedia The average annual growth rate (AAGR) is the average increase in the value of an individual investment, portfolio, asset, or cash stream over the period of a year. It is calculated by taking the arithmetic mean of a series of growth rates. . The average annual growth rate is used in many fields of study.
Average Annual Growth Rate (AAGR) Definition- Investopedia For instance, if a portfolio grows by a net of 15% one year and 25% in the next year, the average annual growth rate would be calculated to be 20%.
What Is Average Annual Growth Rate (AAGR)?
The average annual growth rate (AAGR) is the average increase in the value of an individual investment, portfolio, asset, or cash stream over the period of a year. It is calculated by taking the arithmetic mean of a series of growth rates.
The average annual growth rate is used in many fields of study.
Example:-
in economics, it is used to provide a better picture of the changes in economic activity (e.g. growth rate in real GDP).
KEY TAKEAWAYS
This ratio helps you figure out how much average return you've received over several periods of time.
AAGR is calculated by taking the arithmetic mean of a series of growth rates.
AAGR is a linear measure that does not account for the effects of compounding.
The Formula for the Average Annual Growth Rate (AAGR) Is
where:
GRA =Growth rate in period A
GRB =Growth rate in period B
GRn=Growth rate in period n
N=Number of payments
How to Calculate AAGR
AAGR a standard for measuring average returns of investments over several time periods. You'll find this figure on brokerage statements and it is included in a mutual fund's prospectus. It is essentially the simple average of a series of periodic return growth rates. One thing to keep in mind is that the periods used should all be of equal length,for instance years, months, or weeks—and not to mix periods of different duration.
What Does AAGR Tell You?
The average annual growth rate is helpful in determining long-term trends. It is applicable to almost any kind of financial measure including growth One thing to keep in mind is that the periods used should all be of equal length, is headed. The ratio tells you what your annual return has been, on average.
annual return has been, on average.