Mathematics of FinanceMCQPYQ May 19 Series IIQuestion 1290 of 512
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The difference between CI and SI on a certain money invested for three years at 6%\displaystyle 6\% per annum is 110.16\displaystyle 110.16. The sum is

Options

A3000\displaystyle 3000
B3700\displaystyle 3700
C12000\displaystyle 12000
D10000\displaystyle 10000
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Correct Answer

Option d10000\displaystyle 10000

All Options:

  • A3000\displaystyle 3000
  • B3700\displaystyle 3700
  • C12000\displaystyle 12000
  • D10000\displaystyle 10000

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Detailed Solution & Explanation

**Derivation of Principal Amount** Given: - Time (t\displaystyle t) = 3\displaystyle 3 years - Rate of Interest (r\displaystyle r) = 6%\displaystyle 6\% per annum - Difference between Compound Interest (CI\displaystyle CI) and Simple Interest (SI\displaystyle SI) = Rs. 110.16\displaystyle \text{Rs. }110.16 **Step 1: Use the difference formula for 3 years** Difference=P[3(r100)2+(r100)3]\text{Difference} = P \left[ 3 \left(\frac{r}{100}\right)^2 + \left(\frac{r}{100}\right)^3 \right] 110.16=P[3(0.06)2+(0.06)3]110.16 = P \left[ 3(0.06)^2 + (0.06)^3 \right] 110.16=P[3(0.0036)+0.000216]110.16 = P \left[ 3(0.0036) + 0.000216 \right] 110.16=P[0.0108+0.000216]110.16 = P [ 0.0108 + 0.000216 ] 110.16=0.011016P110.16 = 0.011016 P **Step 2: Solve for Principal (P\displaystyle P)** P=110.160.011016=Rs. 10,000P = \frac{110.16}{0.011016} = \text{Rs. }10,000 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

Exam Strategy Tip

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