Question

What is the approximate compounded average annual growth rate of the Actual Inflow of FDI over the period 2003 to 2007?

• A. 63%
• B. 82%
• C. 98%
• D. 110%

Answer 1

The correct option is B

82%

Actual Inflow of FDI
In 2003 = Rs. 2,000 crs.
In 2007 = Rs. 22,000 crs.

CAGR = ${\left(\frac{22000}{2000}\right)}^{\frac{1}{4}}-1=4\sqrt{11}-1\approx 1.82-1=0.82=82\%$

You can also use the reverse approach. Choose a middle answer option. If 82% is the answer
then ${1.8}^4+1i.e.({18}^2\times {18}^2)+1=(32\times 32)+1\approxeq \left(\frac{22000}{2000}\right)=110.$