Mathematics of FinanceMCQMTP Jun 23 Series IIQuestion 1385 of 512
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1,25,000\displaystyle 1,25,000 is borrowed at compound interest at the rate of 2%\displaystyle 2\% for the 1\displaystyle 1st year, 3%\displaystyle 3\% for the 2\displaystyle 2nd year and 4%\displaystyle 4\% for the 3\displaystyle 3rd year. Find the amount to be paid after 3\displaystyle 3 years

Options

A125678\displaystyle 125678
B136587\displaystyle 136587
C163378\displaystyle 163378
D136578\displaystyle 136578
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Correct Answer

Option d136578\displaystyle 136578

All Options:

  • A125678\displaystyle 125678
  • B136587\displaystyle 136587
  • C163378\displaystyle 163378
  • D136578\displaystyle 136578

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Detailed Solution & Explanation

**Derivation of Compound Interest Value** Given: - Principal (P\displaystyle P) = Rs. 1,25,000\displaystyle \text{Rs. }1,25,000 - Rates for successive years: r1=2%\displaystyle r_1 = 2\%, r2=3%\displaystyle r_2 = 3\%, r3=4%\displaystyle r_3 = 4\% - Time (t\displaystyle t) = 3\displaystyle 3 years **Step 1: Set up the compound interest formula with varying rates** A=P(1+r1)(1+r2)(1+r3)A = P(1 + r_1)(1 + r_2)(1 + r_3) A=125000(1+0.02)(1+0.03)(1+0.04)A = 125000(1 + 0.02)(1 + 0.03)(1 + 0.04) A=125000(1.02)(1.03)(1.04)A = 125000(1.02)(1.03)(1.04) **Step 2: Calculate the product** 1.02×1.03×1.04=1.0926241.02 \times 1.03 \times 1.04 = 1.092624 A=125000×1.092624=Rs. 1,36,578A = 125000 \times 1.092624 = \text{Rs. }1,36,578 Hence, **Option D** 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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