Mathematics of FinanceMCQPYQ Jan 21Question 1216 of 512
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The simple interest on sum at 4%\displaystyle 4\% p.a. for 2\displaystyle 2 years is 80\displaystyle 80. Find the CI on the same sum for the same period.

Options

A81.60\displaystyle 81.60
B80.80\displaystyle 80.80
C83.20\displaystyle 83.20
D82.30\displaystyle 82.30
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Correct Answer

✅ Option a — 81.60\displaystyle 81.60

All Options:

  • A81.60\displaystyle 81.60
  • B80.80\displaystyle 80.80
  • C83.20\displaystyle 83.20
  • D82.30\displaystyle 82.30

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Detailed Solution & Explanation

**Derivation of Compound Interest from Simple Interest** Given: - Simple Interest (SI\displaystyle SI) = Rs. 80\displaystyle \text{Rs. }80 - Rate of Interest (r\displaystyle r) = 4%\displaystyle 4\% per annum - Time (t\displaystyle t) = 2\displaystyle 2 years **Step 1: Find the Principal (P\displaystyle P) using Simple Interest** SI=P×r×t100SI = \frac{P \times r \times t}{100} 80=P×4×210080 = \frac{P \times 4 \times 2}{100} 80=0.08P  ⟹  P=Rs. 1,00080 = 0.08 P \implies P = \text{Rs. }1,000 **Step 2: Calculate Compound Interest (CI\displaystyle CI) on the same sum** CI=P[(1+r100)t−1]CI = P\left[\left(1 + \frac{r}{100}\right)^t - 1\right] CI=1000[(1+0.04)2−1]CI = 1000\left[\left(1 + 0.04\right)^2 - 1\right] CI=1000[(1.04)2−1]CI = 1000\left[(1.04)^2 - 1\right] CI=1000[1.0816−1]CI = 1000[1.0816 - 1] CI=1000×0.0816=Rs. 81.60CI = 1000 \times 0.0816 = \text{Rs. }81.60 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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