Mathematics of FinanceMCQPYQ June 19Question 1194 of 512
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If P=Rs. 2,96\displaystyle P = \text{Rs. }2,96, and R=8%\displaystyle R = 8\% compounded annually then P=\displaystyle P =

Options

ARs. 14,000\displaystyle \text{Rs. }14,000
BRs. 15,000\displaystyle \text{Rs. }15,000
CRs. 16,000\displaystyle \text{Rs. }16,000
DRs. 17,000\displaystyle \text{Rs. }17,000
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Correct Answer

Option bRs. 15,000\displaystyle \text{Rs. }15,000

All Options:

  • ARs. 14,000\displaystyle \text{Rs. }14,000
  • BRs. 15,000\displaystyle \text{Rs. }15,000
  • CRs. 16,000\displaystyle \text{Rs. }16,000
  • DRs. 17,000\displaystyle \text{Rs. }17,000

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Detailed Solution & Explanation

**Derivation of Principal** Given: - The relationship: Pi2=96\displaystyle P \cdot i^2 = 96 - Rate (R\displaystyle R) = 8%\displaystyle 8\% compounded annually - Here, i=R100=0.08\displaystyle i = \frac{R}{100} = 0.08 represents the periodic rate. - In financial math, the equation Pi2=Difference\displaystyle P \cdot i^2 = \text{Difference} represents the difference between compound interest and simple interest for 2\displaystyle 2 years. **Step 1: Set up the equation with the given rate** P(0.08)2=96P \cdot (0.08)^2 = 96 **Step 2: Solve for P\displaystyle P** P0.0064=96P \cdot 0.0064 = 96 P=960.0064P = \frac{96}{0.0064} P=96×1000064P = \frac{96 \times 10000}{64} P=15,000P = 15,000 Hence, **Option B** 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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