Numerical Reasoning
CAGR (Compound Growth)
Find the annual growth rate when a value grows over multiple years with compounding.
Overview
Compound Annual Growth Rate (CAGR) questions give you a starting value, an ending value, and a number of years. You must find the constant annual rate that would produce the observed total growth.
The formula is: CAGR = (End/Start)^(1/n) - 1. This is the most mathematically demanding template in EPSO numerical reasoning.
What is tested
- Applying the CAGR formula with nth roots
- Counting years correctly (intervals, not data points)
- Distinguishing compound from simple growth
- Working with growth multipliers (1 + r)
Preparation tips
- 2018 to 2022 = 4 years, not 5 — always subtract start from end
- The compound rate is always LOWER than total change ÷ years
- On a calculator: (End/Start)^(1/n) uses the power key, then subtract 1
- If answer choices are close together, precision matters — carry extra decimals
Master the mathematical foundations
Every numerical reasoning question tests 2-4 mathematical concepts. Weakness in one concept means failure on every question that uses it. Review the concept library to build a solid foundation.
Study Mathematical Concepts