The **Compound Annual Growth Rate (CAGR)** is a metric used to measure the average annual growth rate of an investment over a specified period of time, assuming the investment grows at a steady rate. It’s calculated using the formula:
\[
CAGR = \left( \frac{Ending\:Value}{Beginning\:Value} \right)^{\frac{1}{n}} - 1
\]
Where:
- **Ending Value**: The final value of the investment.
- **Beginning Value**: The initial value.
- **n**: The number of years.
CAGR is useful for comparing the performance of different investments or business growth over time, smoothing out volatility and highlighting overall growth trends. It does not account for fluctuations within the period but provides a simple measure of growth.
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