Mr Mohan invested ₹5000 in a fund at the beginning of year 2018 and by the end of year 2018 his investment was worth ₹9000. Next year market crashed and he lost ₹ 3000 and ending up with ₹6000 at the end of year 2019. Next year i.e. 2020 he gained ₹4500 and ending up with ₹10500 at the end of the year. Find CAGR of his investment.
Answer & explanation
Correct answer: option 2
The correct answer is option (2) : 28%
Given $P.V. = ₹5000$
$F.V. =₹10500$
$n= 3\, years $
So, CAGR $=\left(\frac{10500}{5000}\right){1/3}-1$
$= (2.1)^{1/3}-1$
Let $x = (2.1)^{1/3}$
$log\, x=\frac{1}{3}log (2.1)$
$=\frac{1}{3}×0.3222$
$= 0.1074$
$x= antiog \, 0.1074$
$= 1.280 $
So, CAGR = $ 1.280-1 = 0.280$
Hence, CAGR $= 0.280 × 100$%
= 28%