Mathematics of FinanceMCQPYQ Nov 18Question 1187 of 512
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How much will Rs. 25,000\displaystyle \text{Rs. }25,000 amount to in 2\displaystyle 2 years at compound interest if the rates for the successive years are 4%\displaystyle 4\% and 5%\displaystyle 5\% per year

Options

ARs. 27,300\displaystyle \text{Rs. }27,300
BRs. 27,000\displaystyle \text{Rs. }27,000
CRs. 27,500\displaystyle \text{Rs. }27,500
DRs. 27,900\displaystyle \text{Rs. }27,900
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Correct Answer

Option aRs. 27,300\displaystyle \text{Rs. }27,300

All Options:

  • ARs. 27,300\displaystyle \text{Rs. }27,300
  • BRs. 27,000\displaystyle \text{Rs. }27,000
  • CRs. 27,500\displaystyle \text{Rs. }27,500
  • DRs. 27,900\displaystyle \text{Rs. }27,900

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Detailed Solution & Explanation

**Derivation of Compound Interest Amount with Successive Rates** Given: - Principal (P\displaystyle P) = Rs. 25,000\displaystyle \text{Rs. }25,000 - Time (t\displaystyle t) = 2\displaystyle 2 years - Rate for year 1 (r1\displaystyle r_1) = 4%\displaystyle 4\% per annum - Rate for year 2 (r2\displaystyle r_2) = 5%\displaystyle 5\% per annum **Step 1: Set up the amount equation for successive rates** A=P(1+r1)(1+r2)A = P(1 + r_1)(1 + r_2) A=25000(1+4100)(1+5100)A = 25000\left(1 + \frac{4}{100}\right)\left(1 + \frac{5}{100}\right) **Step 2: Substitute values and calculate** A=25000×1.04×1.05A = 25000 \times 1.04 \times 1.05 A=26000×1.05=Rs. 27,300A = 26000 \times 1.05 = \text{Rs. }27,300 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

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