An investment of Rs. 3,00,000 becomes Rs. 4,50,000 in 5 years, then the compound annual growth rate (CAGR) is equal to: [Given that: \((1.5)^{1/5} = 1.084\)]
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → 8.4%
The compound annual growth rate over n years is
\( \displaystyle \text{CAGR} = \left(\frac{\text{Final value}}{\text{Initial value}}\right)^{1/n} - 1 \)
Here n = 5:
\( \displaystyle \text{CAGR} = \left(\frac{450000}{300000}\right)^{1/5} - 1 \)
\(\text{CAGR} = (1.5)^{1/5} - 1\)
\(\text{CAGR} = 1.084 - 1 = 0.084\)
So the CAGR is 8.4%.
CBSE Applied Mathematics (Class XII):
Compound Annual Growth Rate
