Mathematics of FinanceMCQPYQ Nov. 20Question 1439 of 512
All Questions

Find the future value of annuity of 1,000\displaystyle ₹ 1,000 made annually for 7\displaystyle 7 years at interest rate of 14%\displaystyle 14\% compounded annually. Given that (1.14)7=2.5023\displaystyle (1.14)^7 = 2.5023.

Options

A10,730.7\displaystyle 10,730.7
B5,365.35\displaystyle 5,365.35
C8,756\displaystyle 8,756
D9,892.34\displaystyle 9,892.34
For any discrepancies in this question, email contact@cadada.in

Correct Answer

Option a10,730.7\displaystyle 10,730.7

All Options:

  • A10,730.7\displaystyle 10,730.7
  • B5,365.35\displaystyle 5,365.35
  • C8,756\displaystyle 8,756
  • D9,892.34\displaystyle 9,892.34

Ad

Detailed Solution & Explanation

Let the annual payment of the annuity be A=Rs. 1,000\displaystyle A = \text{Rs. }1,000. Given parameters: * Time (n\displaystyle n) = 7\displaystyle 7 years * Interest Rate (r\displaystyle r) = 14%\displaystyle 14\% p.a., so i=0.14\displaystyle i = 0.14 * Given factor: (1.14)7=2.5023\displaystyle (1.14)^7 = 2.5023 The formula for the Future Value of an ordinary annuity is: FV=A×(1+i)n1iFV = A \times \frac{(1+i)^n - 1}{i} Substituting the values: FV=1,000×(1.14)710.14FV = 1,000 \times \frac{(1.14)^7 - 1}{0.14} FV=1,000×2.502310.14FV = 1,000 \times \frac{2.5023 - 1}{0.14} FV=1,000×1.50230.14FV = 1,000 \times \frac{1.5023}{0.14} FV1,000×10.7307=10,730.7FV \approx 1,000 \times 10.7307 = 10,730.7 Thus, the future value of the annuity is Rs. 10,730.7\displaystyle \text{Rs. }10,730.7. 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

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