Mathematics of FinanceMCQMTP Sep 24 Series IIQuestion 1431 of 512
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On what sum will the difference between the S.I. and C.I. for 3\displaystyle 3 years at 6%\displaystyle 6\% p.a. amount to 13.77\displaystyle 13.77?

Options

A1250\displaystyle 1250
B1150\displaystyle 1150
C1320\displaystyle 1320
DNone of these
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Correct Answer

Option a1250\displaystyle 1250

All Options:

  • A1250\displaystyle 1250
  • B1150\displaystyle 1150
  • C1320\displaystyle 1320
  • DNone of these

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Detailed Solution & Explanation

Let the sum of money (principal) be P\displaystyle P. The rate of interest is r=6%\displaystyle r = 6\% p.a., so i=6100=0.06\displaystyle i = \frac{6}{100} = 0.06. The time period is t=3\displaystyle t = 3 years. The formula for the difference between Compound Interest (CI\displaystyle CI) and Simple Interest (SI\displaystyle SI) for a 3\displaystyle 3-year period is: CISI=P×i2×(3+i)CI - SI = P \times i^2 \times (3 + i) Given that the difference is Rs. 13.77\displaystyle \text{Rs. }13.77: 13.77=P×(0.06)2×(3+0.06)13.77 = P \times (0.06)^2 \times (3 + 0.06) 13.77=P×0.0036×3.0613.77 = P \times 0.0036 \times 3.06 13.77=0.011016P13.77 = 0.011016 P Solving for P\displaystyle P: P=13.770.011016=1,250P = \frac{13.77}{0.011016} = 1,250 Thus, the sum of money is Rs. 1,250\displaystyle \text{Rs. }1,250. 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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