Iift 2014 Question 109
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IIFT
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 = 248/12= 16 times.
Therefore, the approximate expected total value of investment (in INR) from your business 48 years later = 16*30,00,000 = 4,80,00,000.