Mathematics of FinanceMCQPYQ Nov 19Question 1292 of 512
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1000\displaystyle 1000 is invested at annual rate of interest of 10%\displaystyle 10\% p.a. The amount after two years if compounding is done annually is ________.

Options

A121\displaystyle 121
B1210\displaystyle 1210
C2110\displaystyle 2110
DNone of these
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Correct Answer

Option b1210\displaystyle 1210

All Options:

  • A121\displaystyle 121
  • B1210\displaystyle 1210
  • C2110\displaystyle 2110
  • DNone of these

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Detailed Solution & Explanation

**Derivation of Future Value** Given: - Principal (P\displaystyle P) = Rs. 1,000\displaystyle \text{Rs. }1,000 - Rate of Interest (r\displaystyle r) = 10%\displaystyle 10\% per annum - Time (t\displaystyle t) = 2\displaystyle 2 years - Compounded annually **Step 1: Calculate the future value (A\displaystyle A)** A=P(1+r)tA = P(1 + r)^t A=1000(1+0.10)2A = 1000(1 + 0.10)^2 A=1000(1.10)2A = 1000(1.10)^2 A=1000×1.21=Rs. 1,210A = 1000 \times 1.21 = \text{Rs. }1,210 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

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