Mathematics of FinanceMCQPYQ Dec 22Question 1237 of 512
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A farmer borrowed 3,600\displaystyle 3,600 at the rate of 15%\displaystyle 15\% simple interest p.a. At the end of 4\displaystyle 4 years, he cleared this account by paying 4,000\displaystyle 4,000 and a cow. The cost of the cow is:

Options

A1,000\displaystyle 1,000
B1,200\displaystyle 1,200
C1,550\displaystyle 1,550
D1,760\displaystyle 1,760
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Correct Answer

Option d1,760\displaystyle 1,760

All Options:

  • A1,000\displaystyle 1,000
  • B1,200\displaystyle 1,200
  • C1,550\displaystyle 1,550
  • D1,760\displaystyle 1,760

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Detailed Solution & Explanation

**Derivation of Cow Value** Given: - Borrowed Principal (P\displaystyle P) = Rs. 3,600\displaystyle \text{Rs. }3,600 - Simple Interest Rate (r\displaystyle r) = 15%\displaystyle 15\% per annum - Time (t\displaystyle t) = 4\displaystyle 4 years - Amount repaid = Rs. 4,000\displaystyle \text{Rs. }4,000 + cost of a cow **Step 1: Calculate Simple Interest (SI\displaystyle SI)** SI=P×r×t100SI = \frac{P \times r \times t}{100} SI=3600×15×4100=Rs. 2,160SI = \frac{3600 \times 15 \times 4}{100} = \text{Rs. }2,160 **Step 2: Calculate total amount due (A\displaystyle A)** A=P+SI=3600+2160=Rs. 5,760A = P + SI = 3600 + 2160 = \text{Rs. }5,760 **Step 3: Solve for the value of the cow** Total Repaid=4000+Cost of Cow=5760\text{Total Repaid} = 4000 + \text{Cost of Cow} = 5760 Cost of Cow=57604000=Rs. 1,760\text{Cost of Cow} = 5760 - 4000 = \text{Rs. }1,760 Hence, **Option D** 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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