Mathematics of FinanceMCQPYQ Nov 19Question 1204 of 512
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The difference between CI and SI for 2\displaystyle 2 years, is Rs. 21\displaystyle \text{Rs. }21. If rate of interest is 5%\displaystyle 5\% find principal

Options

ARs. 8,400\displaystyle \text{Rs. }8,400
BRs. 4,800\displaystyle \text{Rs. }4,800
CRs. 8,000\displaystyle \text{Rs. }8,000
DRs. 8,200\displaystyle \text{Rs. }8,200
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Correct Answer

Option aRs. 8,400\displaystyle \text{Rs. }8,400

All Options:

  • ARs. 8,400\displaystyle \text{Rs. }8,400
  • BRs. 4,800\displaystyle \text{Rs. }4,800
  • CRs. 8,000\displaystyle \text{Rs. }8,000
  • DRs. 8,200\displaystyle \text{Rs. }8,200

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Detailed Solution & Explanation

**Derivation of Principal Amount** Given: - Difference between Compound Interest (CI\displaystyle CI) and Simple Interest (SI\displaystyle SI) for 2\displaystyle 2 years = Rs. 21\displaystyle \text{Rs. }21 - Rate of Interest (r\displaystyle r) = 5%\displaystyle 5\% per annum **Step 1: Set up the formula for difference between CI and SI for 2 years** Difference=P(r100)2\text{Difference} = P \left(\frac{r}{100}\right)^2 **Step 2: Solve for P\displaystyle P** 21=P(5100)221 = P \left(\frac{5}{100}\right)^2 21=P(0.05)221 = P \left(0.05\right)^2 21=0.0025P21 = 0.0025 P P=210.0025=Rs. 8,400P = \frac{21}{0.0025} = \text{Rs. }8,400 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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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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