Posted by UnkerSam > 2014-12-09 01:03 | Report Abuse

that is not the right way to calculate annual return. 96sen - 73sen = 23 divided by 4 does not really reflect the actual return. Because the return suppose to compound.

Google CAGR calculator

Future value 96, present value 73, 4 years, the campounded annual return is only 7.09%

few years the difference is small, but 10 years 20 years down the road make big difference

For instance, year 1 is 100, year 10 get back 200 in total, based on the calculation 200-100 = 100 divided by 10 the average return is 10%

But actually if the investment giving 10% annual return, Year 1 = 100, by Year 10 it suppose to be 259. Year 1 = 100, Year 2 become 110, Year 3 121, Year 4 133.....

Posted by Justin Ngo > 2014-12-09 07:29 | Report Abuse

Unkersam, thanks for your guidance. I just learn about cagr today.