Mathematics of FinanceMCQMTP Oct 21, ICAI SMQuestion 1339 of 512
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The difference between Compound Interest and Simple Interest on a certain sum for 2\displaystyle 2 years at 6%\displaystyle 6\% p.a. is 13.50\displaystyle 13.50. Find the sum

Options

A3750\displaystyle 3750
B2750\displaystyle 2750
C4750\displaystyle 4750
Dnone of these
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Correct Answer

Option a3750\displaystyle 3750

All Options:

  • A3750\displaystyle 3750
  • B2750\displaystyle 2750
  • C4750\displaystyle 4750
  • Dnone of these

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Detailed Solution & Explanation

**Derivation of Principal Sum** Given: - Time (t\displaystyle t) = 2\displaystyle 2 years - Rate of Interest (r\displaystyle r) = 6%\displaystyle 6\% per annum - Difference between Compound Interest and Simple Interest (CISI\displaystyle CI - SI) = Rs. 13.50\displaystyle \text{Rs. }13.50 **Step 1: Use the difference formula for 2 years** Difference=P(r100)2\text{Difference} = P \left(\frac{r}{100}\right)^2 13.50=P(6100)213.50 = P \left(\frac{6}{100}\right)^2 13.50=P(0.06)213.50 = P (0.06)^2 13.50=0.0036P13.50 = 0.0036 P **Step 2: Solve for P\displaystyle P** P=13.500.0036=Rs. 3,750P = \frac{13.50}{0.0036} = \text{Rs. }3,750 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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