Mathematics of FinanceMCQPYQ June 24Question 1560 of 512
All Questions

If the initial investment of 4,00,000\displaystyle 4,00,000 becomes 6,00,000\displaystyle 6,00,000 in 24\displaystyle 24 months, then CAGR is

Options

A30.33%\displaystyle 30.33\%
B22.4%\displaystyle 22.4\%
C19.46%\displaystyle 19.46\%
D14.47%\displaystyle 14.47\%
For any discrepancies in this question, email contact@cadada.in

Correct Answer

Option b22.4%\displaystyle 22.4\%

All Options:

  • A30.33%\displaystyle 30.33\%
  • B22.4%\displaystyle 22.4\%
  • C19.46%\displaystyle 19.46\%
  • D14.47%\displaystyle 14.47\%

Ad

Detailed Solution & Explanation

The Compound Annual Growth Rate (CAGR) is: CAGR=(FVPV)1n1\text{CAGR} = \left(\frac{FV}{PV}\right)^{\frac{1}{n}} - 1 Given: * Initial investment (PV\displaystyle PV) = 4,00,000\displaystyle 4,00,000 * Final value (FV\displaystyle FV) = 6,00,000\displaystyle 6,00,000 * Time (n\displaystyle n) = 24\displaystyle 24 months = 2\displaystyle 2 years Substituting the values: CAGR=(6,00,0004,00,000)121=(1.5)0.511.22471=22.47%\text{CAGR} = \left(\frac{6,00,000}{4,00,000}\right)^{\frac{1}{2}} - 1 = (1.5)^{0.5} - 1 \approx 1.2247 - 1 = 22.47\% This is closest to Option B (22.4%\displaystyle 22.4\%). Hence, **Option B** is the correct answer.

About This Chapter: Mathematics of Finance

Paper

Paper 3: Quantitative Aptitude

Weightage

12-16 Marks

Key Topics

Simple & Compound Interest, Annuity, Perpetuity

The most important mathematical chapter in the entire syllabus. It covers Simple Interest (SI), Compound Interest (CI), Nominal vs Effective rates, Present and Future Value, Annuities (Ordinary and Due), Sinking Funds, and Perpetuities. The concepts learned here are applied heavily in CA Intermediate and Final.

View Official ICAI Syllabus

Exam Strategy Tip

Guaranteed 12-16 marks. Master your calculator! Learn the 'GT' and compound interest M+/M- tricks to solve annuity questions in 10 seconds without writing long formulas.

Related Comparison Tables

More Questions from Mathematics of Finance

Ready to Master Mathematics of Finance?

Practice all 512 questions with instant feedback, earn XP, track your streaks, and ace your CA Foundation exam.

Start Practicing — It's Free