What is compoundedaverage growth rate?

Let us assume you purchased your house for $100,000 and sold it 6 years later to Peter for $200,000!
Your profit is $100,000 because you doubled your money in the six years. Growth upon growth is called compounding. In this example your return on investment is 12.25%. Real Estate was growing at approximately 12 % per year and therefore your home was doubling in value every six years.
You could also have elected to deposit $100,000 into a financial institution that paid you 12.25% each year and not touched any of the money for 6 years. The mathematics is exactly the same. Anyone that understands present value future value calculations understands the algebraic formula;
FV = PV (1+i)^n
“FV” is the future value
“PV” is the present value
“i” is the interest or growth per period
“n” is the number of periods of time
FV=100,000x(1.1225)^6
FV=200,000
The “^ n” means that the numbers in the brackets are raised to the nth power. If your algebra is rusty don’t fret, here is the example in a simpler format showing the growth upon growth;
12.25% interest (or growth) on $100 at the end of a year is $12.25 Add that to the $100 for a total of $112.25 or the same thing can be arrived at by multiplying the $100 by 1.1225
Thus for 6 years of compounded growth;
FV = 100,000 x 1.1225 x 1.1225 x 1.1225 x 1.1225 x 1.1225 x 1.1225
FV = 200,000
The 12.25% is called the average compounded rate of growth (or compounded return) or simply the compounded rate of growth