CA Foundation · Quantitative Aptitude · Mathematics of Finance
The population of a town increases at a constant compound annual growth rate. If it was 50,000 at the start and grows at 10% per annum, what will it be after 3 years?
The population will be 66,550. With a 10% compound annual growth rate, the starting figure of 50,000 is multiplied by 1.1 three times, giving 50,000 × 1.331 = 66,550. Simple growth would wrongly give 65,000, ignoring growth on earlier increases.
- A66,550Correct
- B65,000
- C60,500
- D63,000
Explanation
Population = 50,000 × (1.1)^3 = 50,000 × 1.331 = 66,550. The 65,000 option uses simple growth (30% of 50,000 added). The 60,500 option stops after 2 years of compounding.
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