Question 113

# Eight years after completion of your MBA degree, you start a business of your own. You invest INR 30,00,000 in the business that is expected to give you a return of 6%, compounded annually. If the expected number of years by which your investment shall double is 72/r, where r is the percent interest rate, the approximate expected total value of investment (in INR) from your business 48 years later is:

Solution

Eight years after completion of your MBA degree, you start a business of your own. You invest INR 30,00,000 in the business that is expected to give you a return of 6%, compounded annually. If the expected number of years by which your investment shall double is 72/r, where r is the percent interest rate, the approximate expected total value of investment (in INR) from your business 48 years later is:

It is given that the expected number of years by which your investment shall double is 72/r, where r is the percent interest rate.

We are given that r = 6%. Therefore, it will take 72/6 = 12 years for money to grow twice of initial investment. In every 12 years, the money will become 2 fold. Therefore, in 48 years money will grow to = $$2^{48/12}$$ = 16 times.Â

Therefore, the approximate expected total value of investment (in INR) from your business 48 years later = 16*30,00,000 = 4,80,00,000.