According to Investopedia, CAGR is defined as t"he year-over-year growth rate of an investment over a specified period of time." However, the number need not be an investment. It can be profits, revenue, etc. CAGR is often mentioned in research reports and investor presentations of publicly traded companies.
Example:
According to HFR Industry Reports, aggregate fund of hedge funds AUM has grown from $76 billion in 1999 to $547 billion in 2006.
What is the CAGR?
Ending value:$547 billion
Beginning value: $76 billion
n = 7 years ; 2006-1999 = 7
=(547/76)^(1/7)-1
Apply to the formula:
http://www.investopedia.com/terms/c/cagr.asp
http://office.microsoft.com/en-us/excel/HP011225061033.aspx
OR download a free spreadsheet from this blog:
http://www.experiglot.com/2006/01/28/compound-annual-growth-rate-cagr-calculator-xls/
The answer is 32.6%.
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