Mrs Vandana invested ₹35000 in a shares of a company and reinvested the earnings every year in buying the shares of the same company. At the end of 5 years, the value of shares increased to ₹56000. Calculate the compound annual growth rate of her investment.

9.8%

The correct answer is option (4) : 9.8%

Given P.V = ₹35000

F.V = ₹ 56000

n = 5 years

So, CAGR =$\left(\frac{F.V}{P.V}\right)^{\frac{1}{n}}-1$

$\left(\frac{56000}{35000}\right)^{1/5}-1$

$= (1.6)^{1/5}-1$

Let $x= (1.6)^{1/5}$

$log\, x =\frac{1}{5}log 1.6$

$=\frac{1}{5}×0.2041$

$= 0.04082$

$x= antilog $ 0.4082 = 1.098$

So, CAGR $= 1.098-1= 0.098$

Hence CAGR $= 0.098×100$%

$= 9.8$%