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Ram invested ₹10,000 in a stock of a company for 6 years. The value of his investment at the end of each year is given below:

Year 1Year 2Year 3Year 4Year 5Year 6
₹10,000₹11,500₹13,000₹11,800₹12,200₹14,000

Then CAGR % of his investment is:

(Given (1.4)1/6=1.058(1.4)^{1/6}=1.058)

Solution

✅ Correct Option: 1

CAGR=(Ending valueBeginning value)1/n−1CAGR = \left(\dfrac{\text{Ending value}}{\text{Beginning value}}\right)^{1/n} - 1.

Here the value grows from ₹10,000 to ₹14,000 over the stated 6-year holding period.

CAGR=(1.4)1/6−1=1.058−1=0.058=5.8%CAGR = (1.4)^{1/6} - 1 = 1.058 - 1 = 0.058 = 5.8\%.

Note: The table labels six year-end values starting at the invested amount; we have used the 6-year period indicated by the supplied value of (1.4)1/6(1.4)^{1/6}.

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