Mr. X invested Rs. 4,00,000 in shares for 5 years. The value of this investment was Rs. 4,50,000 at the end of the second year, Rs. 4,90,000 at the end of the third year and on maturity, the final value stood at Rs. 6,00,000. The compound annual growth rate of this investment is: [Given that: $(1.5)^{1/5} = 1.084$]

8.4 %

The correct answer is Option (1) → 8.4 %

Initial investment: P = 400,000

Final value after 5 years: A = 600,000

Number of years: n = 5

Compound Annual Growth Rate (CAGR) formula: CAGR = $(\frac{A}{P})^{\frac{1}{n}} - 1$

Substitute the values:

CAGR = $(\frac{600,000}{400,000})^{\frac{1}{5}} - 1$

CAGR = $(\frac{3}{2})^{\frac{1}{5}} - 1$

CAGR = $1.084 - 1$

CAGR = $0.084 = 8.4\%$