Mathematics of FinanceMCQMTP June 24 Series IIIQuestion 1422 of 512
All Questions

The time in which a sum of money will be doubled at 6%\displaystyle 6\% compound interest compounded annually approximately.

Options

A10\displaystyle 10 years
B12\displaystyle 12 years
C13\displaystyle 13 years
D14\displaystyle 14 years
For any discrepancies in this question, email contact@cadada.in

Correct Answer

Option b12\displaystyle 12 years

All Options:

  • A10\displaystyle 10 years
  • B12\displaystyle 12 years
  • C13\displaystyle 13 years
  • D14\displaystyle 14 years

Ad

Detailed Solution & Explanation

Let the principal be P\displaystyle P. The rate of compound interest is r=6%\displaystyle r = 6\% p.a. compounded annually, so i=0.06\displaystyle i = 0.06. We want to find the approximate number of years (t\displaystyle t) for the sum to double (A=2P\displaystyle A = 2P): P(1+i)t=2PP(1+i)^t = 2P (1.06)t=2(1.06)^t = 2 Taking natural logarithms on both sides: tln(1.06)=ln(2)t \ln(1.06) = \ln(2) t0.6931470.05826911.9 yearst \approx \frac{0.693147}{0.058269} \approx 11.9 \text{ years} Thus, the approximate number of years is 12\displaystyle 12 years. Hence, **Option B** 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

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.

Key Concepts to Understand

Related Comparison Tables

More Questions from Mathematics of Finance

Ready to Master Mathematics of Finance?

Practice all 512 questions with instant feedback, earn XP, track your streaks, and ace your CA Foundation exam.

Start Practicing — It's Free