A person invested Rs. 20000 in a mutual fund in year 2018. The value of the mutual fund increased to Rs. 32000 in year 2023. The compound annual growth rate of his investment is:
[Given that \((1.6)^{1/5}= 1.098\)]
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → 9.8%
The compound annual growth rate is the constant yearly rate that takes the beginning value to the ending value in n years:
\( \displaystyle \text{CAGR} = \left(\frac{\text{Ending value}}{\text{Beginning value}}\right)^{1/n} - 1 \)
From 2018 to 2023, n = 5 years.
\( \displaystyle \text{CAGR} = \left(\frac{32000}{20000}\right)^{1/5} - 1 = (1.6)^{1/5} - 1 \)
\(\text{CAGR} = 1.098 - 1 = 0.098 = 9.8\%\)
CBSE Applied Mathematics (Class XII):
Compound Annual Growth Rate
