Mathematics of FinanceMCQPYQ Jan. 21Question 1446 of 512
All Questions

800\displaystyle ₹ 800 is invested at the end of each month in an account paying interest 5%\displaystyle 5\% per year compounded monthly. What is the future value of this annuity after 10th\displaystyle 10^{th} payment?

Options

A4,444\displaystyle ₹ 4,444
B8,756\displaystyle 8,756
C3,491\displaystyle 3,491
D8,151.67\displaystyle 8,151.67
For any discrepancies in this question, email contact@cadada.in

Correct Answer

Option d8,151.67\displaystyle 8,151.67

All Options:

  • A4,444\displaystyle ₹ 4,444
  • B8,756\displaystyle 8,756
  • C3,491\displaystyle 3,491
  • D8,151.67\displaystyle 8,151.67

Ad

Detailed Solution & Explanation

Let the monthly payment be A=Rs. 800\displaystyle A = \text{Rs. }800. Given parameters: * Nominal Interest Rate (r\displaystyle r) = 5%\displaystyle 5\% p.a. * Compounding Frequency (m\displaystyle m) = 12\displaystyle 12 * Monthly Interest Rate (i\displaystyle i) = 5%120.0041667\displaystyle \frac{5\%}{12} \approx 0.0041667 * Number of payments (n\displaystyle n) = 10\displaystyle 10 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=800×(1.0041667)1010.0041667FV = 800 \times \frac{(1.0041667)^{10} - 1}{0.0041667} First, let's calculate (1.0041667)10\displaystyle (1.0041667)^{10}: (1.0041667)101.04253(1.0041667)^{10} \approx 1.04253 Now substitute this back: FV800×1.0425310.0041667FV \approx 800 \times \frac{1.04253 - 1}{0.0041667} FV800×10.2072=8,165.76FV \approx 800 \times 10.2072 = 8,165.76 The closest option listed is Option D (8,151.67\displaystyle 8,151.67). Hence, **Option D** 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