Mathematics of FinanceMCQPYQ Dec 21Question 1227 of 512
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A sum of x\displaystyle x amounts to 27,900\displaystyle 27,900 in 3\displaystyle 3 years and to 41,850\displaystyle 41,850 in 6\displaystyle 6 years at a certain rate percent per annum, when the interest is compounded yearly. The value of x\displaystyle x is:

Options

A16,080\displaystyle 16,080
B18,600\displaystyle 18,600
C18,000\displaystyle 18,000
D16,800\displaystyle 16,800
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Correct Answer

Option b18,600\displaystyle 18,600

All Options:

  • A16,080\displaystyle 16,080
  • B18,600\displaystyle 18,600
  • C18,000\displaystyle 18,000
  • D16,800\displaystyle 16,800

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Detailed Solution & Explanation

**Derivation of Principal Amount in Compound Interest** Given: - Amount after 3\displaystyle 3 years (A3\displaystyle A_3) = Rs. 27,900\displaystyle \text{Rs. }27,900 - Amount after 6\displaystyle 6 years (A6\displaystyle A_6) = Rs. 41,850\displaystyle \text{Rs. }41,850 - Interest is compounded yearly. **Step 1: Set up the Amount equations** A3=x(1+r)3=27900A_3 = x(1 + r)^3 = 27900 A6=x(1+r)6=41850A_6 = x(1 + r)^6 = 41850 **Step 2: Divide the two equations to find (1+r)3\displaystyle (1+r)^3** A6A3=x(1+r)6x(1+r)3\frac{A_6}{A_3} = \frac{x(1+r)^6}{x(1+r)^3} 4185027900=(1+r)3\frac{41850}{27900} = (1+r)^3 (1+r)3=1.5(1+r)^3 = 1.5 **Step 3: Solve for Principal (x\displaystyle x)** Substitute (1+r)3=1.5\displaystyle (1+r)^3 = 1.5 back into the A3\displaystyle A_3 equation: x×1.5=27900x \times 1.5 = 27900 x=279001.5=Rs. 18,600x = \frac{27900}{1.5} = \text{Rs. }18,600 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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