Mr. Mittal invested Rs. 20,000 in a mutual fund in the year 2019. The value of the mutual fund increased to Rs. 32,000 in the year 2024. The compound annual growth rate of his investment is:

[Given $(1.6)^{1/5} = 1.098$]

9.8%

The correct answer is Option (3) → 9.8%

Compound Annual Growth Rate (CAGR) is calculated using the formula:

$\text{CAGR} = \left(\frac{\text{Final Value}}{\text{Initial Value}}\right)^{\frac{1}{n}} - 1$

Here,

Initial Value = Rs. 20,000

Final Value = Rs. 32,000

n = number of years = 2024 - 2019 = 5

Substitute the values:

$\text{CAGR} = \left(\frac{32000}{20000}\right)^{\frac{1}{5}} - 1$

$\text{CAGR} = (1.6)^{0.2} - 1$

$\text{CAGR} \approx 1.098 - 1$

$\text{CAGR} \approx 0.098$

$\text{CAGR} \approx 9.8\%$