For which one of the following purposes is CAGR (Compounded Annual Growth Rate) not used?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → To understand and analyse the donations received by a non-government organisation
CAGR is used to measure and compare growth rates of investments over time.
It is suitable for:
• calculating average growth of an investment
• comparing performance of investment advisors
• comparing returns of stocks with savings accounts
It is NOT used to analyse donations received by a non-government organisation, since donations do not represent compounded investment growth.
final answer: To understand and analyse the donations received by a non-government organisation