Mathematics of FinanceMCQPYQ Nov 18Question 1178 of 512
All Questions

If Rs. 10,000\displaystyle \text{Rs. }10,000 is invested at 8%\displaystyle 8\% p.a. compounded quarterly, then the value of the investment after 2\displaystyle 2 years is. (Given (1.02)8=1.171659)\displaystyle (1.02)^8 = 1.171659)

Options

ARs. 11,716.59\displaystyle \text{Rs. }11,716.59
BRs. 10,716.59\displaystyle \text{Rs. }10,716.59
CRs. 11,716.59\displaystyle \text{Rs. }11,716.59
DNone of these
For any discrepancies in this question, email contact@cadada.in

Correct Answer

Option aRs. 11,716.59\displaystyle \text{Rs. }11,716.59

All Options:

  • ARs. 11,716.59\displaystyle \text{Rs. }11,716.59
  • BRs. 10,716.59\displaystyle \text{Rs. }10,716.59
  • CRs. 11,716.59\displaystyle \text{Rs. }11,716.59
  • DNone of these

Ad

Detailed Solution & Explanation

**Derivation of Compound Interest Value** Given: - Principal (P\displaystyle P) = Rs. 10,000\displaystyle \text{Rs. }10,000 - Nominal Rate (r\displaystyle r) = 8%\displaystyle 8\% per annum - Compounding Frequency = Quarterly (4 times a year) - Time (t\displaystyle t) = 2\displaystyle 2 years - Value (1.02)8=1.171659\displaystyle (1.02)^8 = 1.171659 **Step 1: Calculate the periodic interest rate (i\displaystyle i) and total periods (n\displaystyle n)** - Periodic rate i=r4=8%4=2%=0.02\displaystyle i = \frac{r}{4} = \frac{8\%}{4} = 2\% = 0.02 per quarter. - Total periods n=t×4=2×4=8\displaystyle n = t \times 4 = 2 \times 4 = 8 quarters. **Step 2: Calculate the future value (A\displaystyle A)** A=P(1+i)nA = P(1 + i)^n A=10000(1+0.02)8A = 10000(1 + 0.02)^8 A=10000(1.02)8A = 10000(1.02)^8 Using the given value (1.02)8=1.171659\displaystyle (1.02)^8 = 1.171659: A=10000×1.171659=Rs. 11,716.59A = 10000 \times 1.171659 = \text{Rs. }11,716.59 Hence, **Option A** is the correct answer.

About This Chapter: Mathematics of Finance

Paper

Paper 3: Quantitative Aptitude

Weightage

12-16 Marks

Key Topics

Simple & Compound Interest, Annuity, Perpetuity

The most important mathematical chapter in the entire syllabus. It covers Simple Interest (SI), Compound Interest (CI), Nominal vs Effective rates, Present and Future Value, Annuities (Ordinary and Due), Sinking Funds, and Perpetuities. The concepts learned here are applied heavily in CA Intermediate and Final.

View Official ICAI Syllabus

Exam Strategy Tip

Guaranteed 12-16 marks. Master your calculator! Learn the 'GT' and compound interest M+/M- tricks to solve annuity questions in 10 seconds without writing long formulas.

Related Comparison Tables

More Questions from Mathematics of Finance

Ready to Master Mathematics of Finance?

Practice all 512 questions with instant feedback, earn XP, track your streaks, and ace your CA Foundation exam.

Start Practicing — It's Free