Here is the formula for the Internal Growth Rate. We will unpack it just below. RP Drake. The first term on the right is quite simple.

CAGR: The compound annual growth rate is a useful metric for calculating the smoothed return on a mutual fund investment over ...

The average annual growth rate in that scenario is 40%. The math begins with summing four zeros and 200 for the annual growth rates. You then divide 200 by five years to get to 40.