If an investment of Rs. 12000 becomes Rs. 72000 in 4 years, then the compound annual growth rate is:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → $(\sqrt[4]{6}-1)×100\%$
Given:
Initial value = 12000
Final value = 72000
Time = 4 years
CAGR formula:
$\text{CAGR} = \left(\frac{\text{Final}}{\text{Initial}}\right)^{\frac{1}{t}} - 1$
$= \left(\frac{72000}{12000}\right)^{\frac{1}{4}} - 1$
$= (6)^{\frac{1}{4}} - 1$
$= \sqrt{\sqrt{6}} - 1$
Numerical value:
$6^{0.25} \approx 1.565$
CAGR ≈ $1.565 - 1 = 0.565$
CAGR ≈ 56.5% per annum