An investment of Rs. 2,50,000 had a compound annual growth rate (CAGR) of \(-10\%\) over 3 years. Its value at the end of the 3 years was
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Rs. 1,82,250
A CAGR of −10% means the value is multiplied by 0.9 every year:
\( \text{EV} = \text{SV} \times (1 - 0.10)^3 \)
\( \text{EV} = 250000 \times 0.729 = 182250 \)
Why the other options are incorrect
Option (1) Rs. 1,75,000 — Incorrect. This takes off 10% of the starting value each year (a simple fall of 30%), without compounding.
Option (3) Rs. 3,32,750 — Incorrect. This uses a growth of +10% a year, \(250000 \times (1.1)^3\).
Option (4) Rs. 2,02,500 — Incorrect. This is the value after only 2 years, \(250000 \times (0.9)^2\).