Compound annual growth rate (CAGR) is the rate of return that would be required for an investment to grow from its beginning balance to its ending balance if you reinvest profits every year.

The standard formula for compound average growth rate is:

(last number/first number)^(1/periods)-1

If you’re seeking investment, check out our latest articles on angel investment and venture capital, and take a look at The Key Elements of the Financial Plan to learn more about your financials.

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At Bplans, it's our goal to make it easy for you to start and run your business. The Bplans glossary of common business terms will help you learn about key small business and entrepreneurship topics.