Mathematics of FinanceMCQMTP Apr 21Question 1320 of 512
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If A person invests 5,000\displaystyle 5,000 in a three years' investment that pays 12%\displaystyle 12\% per annum. Calculate the future value of the investment.

Options

A7024.64\displaystyle 7024.64
B7124.78\displaystyle 7124.78
C7324.48\displaystyle 7324.48
D7526.48\displaystyle 7526.48
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Correct Answer

Option a7024.64\displaystyle 7024.64

All Options:

  • A7024.64\displaystyle 7024.64
  • B7124.78\displaystyle 7124.78
  • C7324.48\displaystyle 7324.48
  • D7526.48\displaystyle 7526.48

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Detailed Solution & Explanation

**Derivation of Future Value** Given: - Principal (P\displaystyle P) = Rs. 5,000\displaystyle \text{Rs. }5,000 - Rate of Interest (r\displaystyle r) = 12%\displaystyle 12\% per annum - Time (t\displaystyle t) = 3\displaystyle 3 years **Step 1: Calculate the future value (A\displaystyle A)** A=P(1+r)tA = P(1 + r)^t A=5000(1+0.12)3A = 5000(1 + 0.12)^3 A=5000(1.12)3A = 5000(1.12)^3 A=5000×1.404928=Rs. 7,024.64A = 5000 \times 1.404928 = \text{Rs. }7,024.64 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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