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EMI, CAGR & Depreciation · Question 42 of 66

Question 42

MediumOriginal question

An investment doubles in 3 years. What is its CAGR, to the nearest per cent? (Take 21/3=1.262^{1/3} = 1.26.)

Options for question 42

Show the answer and explanation
CorrectNot quiteAnswer A

Correct answer: A

Explanation

  1. CAGR =21/3−1= 2^{1/3} - 1.

  2. =1.26−1=0.26= 1.26 - 1 = 0.26, about 26% a year.

Worth noting

33.33% shares the 100% growth equally among 3 years, ignoring compounding.

Concept
The CAGR of a value that doubles
Typical time
90 s
Your time
—
The rule this testsRate of return and CAGR
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