Annual percentage rate of return
The annual return required to achieve 85% over five years follows the formula for the compound annual growth rate (CAGR): (37/20) ^(1/5 (yr)) – 1 = 13.1% annual return. The annualized return varies from the typical average and shows the real gain or loss on an investment, as well as the difficulty in recouping losses. The yearly rate of return method, commonly referred to as the annual percentage rate, is the amount earned on a fund throughout an entire year. The yearly rate of return is calculated by taking the