A person invested ₹20000 in a mutual fund in year 2018. The value of the mutual fund increased to ₹32000 in year 2023. The compound annual growth rate of his investment is: [Given that $(1.6)^{1/5}= 1.098$]

9.8%

The correct answer is Option (1) → 9.8%

Initial value $=20000$

Final value $=32000$

Number of years $=5$

Formula for CAGR

$\text{CAGR}=\left(\frac{\text{Final value}}{\text{Initial value}}\right)^{\frac{1}{n}}-1$

$=\left(\frac{32000}{20000}\right)^{\frac{1}{5}}-1$

$=(1.6)^{\frac{1}{5}}-1$

Given $(1.6)^{\frac{1}{5}}=1.098$

$\text{CAGR}=1.098-1=0.098$

$=9.8\%$

The compound annual growth rate is $9.8\%$.