Mathematics of FinanceMCQPYQ Nov 20Question 1210 of 512
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What sum of money will produce 42,800\displaystyle 42,800 as an interest in 3\displaystyle 3 years and 3\displaystyle 3 months at 2.5%\displaystyle 2.5\% p.a. simple interest?

Options

A3,75,000\displaystyle 3,75,000
B5,26,769\displaystyle 5,26,769
C4,22,000\displaystyle 4,22,000
D2,24,000\displaystyle 2,24,000
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Correct Answer

Option b5,26,769\displaystyle 5,26,769

All Options:

  • A3,75,000\displaystyle 3,75,000
  • B5,26,769\displaystyle 5,26,769
  • C4,22,000\displaystyle 4,22,000
  • D2,24,000\displaystyle 2,24,000

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Detailed Solution & Explanation

**Derivation of Principal Amount** Given: - Simple Interest (SI\displaystyle SI) = Rs. 42,800\displaystyle \text{Rs. }42,800 - Time (t\displaystyle t) = 3\displaystyle 3 years and 3\displaystyle 3 months = 3+312=3.25\displaystyle 3 + \frac{3}{12} = 3.25 years - Rate of Interest (r\displaystyle r) = 2.5%\displaystyle 2.5\% per annum **Step 1: Set up the Simple Interest equation** SI=P×r×t100SI = \frac{P \times r \times t}{100} 42800=P×2.5×3.2510042800 = \frac{P \times 2.5 \times 3.25}{100} 42800=P×8.12510042800 = \frac{P \times 8.125}{100} **Step 2: Solve for P\displaystyle P** 42800×100=8.125P42800 \times 100 = 8.125 P 4280000=8.125P4280000 = 8.125 P P=42800008.125Rs. 5,26,769.23P = \frac{4280000}{8.125} \approx \text{Rs. }5,26,769.23 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

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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