Mathematics of FinanceMCQMTP Mar 22Question 1345 of 512
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How much time would the SI on a certain sum be 0.125\displaystyle 0.125 times the principal at 10%\displaystyle 10\% p.a.

Options

A1.25\displaystyle 1.25 years
B1.75\displaystyle 1.75 years
C2.25\displaystyle 2.25 years
D2.5\displaystyle 2.5 years
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Correct Answer

Option a1.25\displaystyle 1.25 years

All Options:

  • A1.25\displaystyle 1.25 years
  • B1.75\displaystyle 1.75 years
  • C2.25\displaystyle 2.25 years
  • D2.5\displaystyle 2.5 years

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Detailed Solution & Explanation

**Derivation of Simple Interest Time** Given: - Simple Interest (SI\displaystyle SI) = 0.125P\displaystyle 0.125 P - Rate of Interest (R\displaystyle R) = 10%\displaystyle 10\% per annum **Step 1: Set up the Simple Interest formula** SI=P×R×t100SI = \frac{P \times R \times t}{100} 0.125P=P×10×t1000.125 P = \frac{P \times 10 \times t}{100} 0.125=0.10t0.125 = 0.10 t **Step 2: Solve for t\displaystyle t** t=0.1250.10=1.25 yearst = \frac{0.125}{0.10} = 1.25 \text{ years} 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

Exam Strategy Tip

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