Mathematics of FinanceMCQMTP June 24 Series IQuestion 1405 of 512
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The difference between compound interest and simple interest on a certain sum for 2 years @ 10%\displaystyle 10\% p.a. is 100\displaystyle 100. Find the sum:

Options

A10,100\displaystyle 10,100
B10,950\displaystyle 10,950
C10,000\displaystyle 10,000
D9,900\displaystyle 9,900
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Correct Answer

Option c10,000\displaystyle 10,000

All Options:

  • A10,100\displaystyle 10,100
  • B10,950\displaystyle 10,950
  • C10,000\displaystyle 10,000
  • D9,900\displaystyle 9,900

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Detailed Solution & Explanation

Let the principal be P\displaystyle P. The rate of interest is r=10%\displaystyle r = 10\% p.a., so i=10100=0.10\displaystyle i = \frac{10}{100} = 0.10. The time period is t=2\displaystyle t = 2 years. The formula for the difference between Compound Interest (CI\displaystyle CI) and Simple Interest (SI\displaystyle SI) for a 2\displaystyle 2-year period is: CISI=P×i2CI - SI = P \times i^2 Given that the difference is Rs. 100\displaystyle \text{Rs. }100: 100=P×(0.10)2100 = P \times (0.10)^2 100=P×0.01100 = P \times 0.01 Solving for P\displaystyle P: P=1000.01=10,000P = \frac{100}{0.01} = 10,000 Thus, the sum is Rs. 10,000\displaystyle \text{Rs. }10,000. Hence, **Option C** 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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