Mathematics of FinanceMCQPYQ Nov 20Question 1205 of 512
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On what sum will the compound interest at 5%\displaystyle 5\% per annum for 2\displaystyle 2 years compounded annually be 3,280\displaystyle 3,280?

Options

A32,000\displaystyle 32,000
B16,000\displaystyle 16,000
C48,000\displaystyle 48,000
D64,000\displaystyle 64,000
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Correct Answer

Option a32,000\displaystyle 32,000

All Options:

  • A32,000\displaystyle 32,000
  • B16,000\displaystyle 16,000
  • C48,000\displaystyle 48,000
  • D64,000\displaystyle 64,000

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Detailed Solution & Explanation

**Derivation of Principal Amount from Compound Interest** Given: - Compound Interest (CI\displaystyle CI) = Rs. 3,280\displaystyle \text{Rs. }3,280 - Rate of Interest (r\displaystyle r) = 5%\displaystyle 5\% per annum compounded annually - Time (t\displaystyle t) = 2\displaystyle 2 years **Step 1: Set up the Compound Interest equation** CI=P[(1+r100)t1]CI = P\left[\left(1 + \frac{r}{100}\right)^t - 1\right] 3280=P[(1+0.05)21]3280 = P\left[\left(1 + 0.05\right)^2 - 1\right] 3280=P[(1.05)21]3280 = P\left[(1.05)^2 - 1\right] 3280=P[1.10251]3280 = P[1.1025 - 1] 3280=0.1025P3280 = 0.1025 P **Step 2: Solve for Principal (P\displaystyle P)** \displaystyle ' in math mode at position 44: …ext{Rs. }32,000̲ \text{ (which …" style="color:#cc0000">P = \frac{3280}{0.1025} = \text{Rs. }32,000$ \text{ (which corresponds to Option A)} 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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