Mathematics of FinanceMCQMTP Oct 21Question 1335 of 512
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How much will be Rs.25,000\displaystyle 25,000 in 2\displaystyle 2 years at compound interest if the rates for the successive years are at 4%\displaystyle 4\% and 5%\displaystyle 5\% per year

Options

ARs.27,300\displaystyle 27,300
BRs.27,900\displaystyle 27,900
CRs.27,500\displaystyle 27,500
DRs.27,700\displaystyle 27,700
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Correct Answer

Option aRs.27,300\displaystyle 27,300

All Options:

  • ARs.27,300\displaystyle 27,300
  • BRs.27,900\displaystyle 27,900
  • CRs.27,500\displaystyle 27,500
  • DRs.27,700\displaystyle 27,700

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Detailed Solution & Explanation

**Derivation of Future Value** Given: - Principal (P\displaystyle P) = Rs. 25,000\displaystyle \text{Rs. }25,000 - Time (t\displaystyle t) = 2\displaystyle 2 years - Rate for Year 1 (r1\displaystyle r_1) = 4%\displaystyle 4\% - Rate for Year 2 (r2\displaystyle r_2) = 5%\displaystyle 5\% **Step 1: Calculate the future value (A\displaystyle A)** A=P(1+r1)(1+r2)A = P(1 + r_1)(1 + r_2) A=25000(1+0.04)(1+0.05)A = 25000(1 + 0.04)(1 + 0.05) A=25000(1.04)(1.05)A = 25000(1.04)(1.05) A=25000×1.092=Rs. 27,300A = 25000 \times 1.092 = \text{Rs. }27,300 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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