Mathematics of FinanceMCQPYQ Nov 18Question 1179 of 512
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A bank pays 10%\displaystyle 10\% rate of interest compounded annually. A sum of Rs. 400\displaystyle \text{Rs. }400 is deposited in the bank. The amount at the end of 1\displaystyle 1 year will be

Options

ARs. 440\displaystyle \text{Rs. }440
BRs. 439\displaystyle \text{Rs. }439
CRs. 441\displaystyle \text{Rs. }441
DRs. 442\displaystyle \text{Rs. }442
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Correct Answer

Option aRs. 440\displaystyle \text{Rs. }440

All Options:

  • ARs. 440\displaystyle \text{Rs. }440
  • BRs. 439\displaystyle \text{Rs. }439
  • CRs. 441\displaystyle \text{Rs. }441
  • DRs. 442\displaystyle \text{Rs. }442

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Detailed Solution & Explanation

**Derivation of Compound Interest Value** Given: - Principal (P\displaystyle P) = Rs. 400\displaystyle \text{Rs. }400 - Rate of Interest (r\displaystyle r) = 10%\displaystyle 10\% per annum - Time (t\displaystyle t) = 1\displaystyle 1 year - Compounded annually **Step 1: Calculate the future value (A\displaystyle A) at the end of 1\displaystyle 1 year** Since the compounding is annual and the duration is 1\displaystyle 1 year, the amount is: A=P(1+r)tA = P(1 + r)^t A=400(1+0.10)1A = 400(1 + 0.10)^1 A=400×1.10=Rs. 440A = 400 \times 1.10 = \text{Rs. }440 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.

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