Mathematics of FinanceMCQPYQ Nov 18Question 1410 of 512
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If the difference between the compound interest compounded annually and simple interest on a certain amount at 10%\displaystyle 10\% per annum for two years is Rs. 372\displaystyle \text{Rs. }372, then the principal amount is

Options

ARs. 37,200\displaystyle \text{Rs. }37,200
BRs. 37,000\displaystyle \text{Rs. }37,000
CRs. 37,500\displaystyle \text{Rs. }37,500
DNone of these
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Correct Answer

Option aRs. 37,200\displaystyle \text{Rs. }37,200

All Options:

  • ARs. 37,200\displaystyle \text{Rs. }37,200
  • BRs. 37,000\displaystyle \text{Rs. }37,000
  • CRs. 37,500\displaystyle \text{Rs. }37,500
  • DNone of these

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Detailed Solution & Explanation

**Derivation of Principal Amount** Given: - Difference between Compound Interest (CI\displaystyle CI) and Simple Interest (SI\displaystyle SI) for 2\displaystyle 2 years = Rs. 372\displaystyle \text{Rs. }372 - Rate of Interest (r\displaystyle r) = 10%\displaystyle 10\% per annum **Step 1: Set up the formula for difference between CI and SI for 2 years** The formula is: Difference=P(r100)2\text{Difference} = P \left(\frac{r}{100}\right)^2 **Step 2: Substitute the values and solve for Principal (P\displaystyle P)** 372=P(10100)2372 = P \left(\frac{10}{100}\right)^2 372=P(0.1)2372 = P \left(0.1\right)^2 372=0.01P372 = 0.01 P P=3720.01=Rs. 37,200P = \frac{372}{0.01} = \text{Rs. }37,200 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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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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