Mathematics of FinanceMCQPYQ Dec. 21Question 1452 of 512
All Questions

The present value of an annuity of 25,000\displaystyle ₹ 25,000 to be received after 10\displaystyle 10 years at 6%\displaystyle 6\% per annum compounded annually is

Options

A15,960\displaystyle 15,960
B13,960\displaystyle 13,960
C11,960\displaystyle 11,960
D17,960\displaystyle 17,960
For any discrepancies in this question, email contact@cadada.in

Correct Answer

Option b13,960\displaystyle 13,960

All Options:

  • A15,960\displaystyle 15,960
  • B13,960\displaystyle 13,960
  • C11,960\displaystyle 11,960
  • D17,960\displaystyle 17,960

Ad

Detailed Solution & Explanation

Let the present value be PV\displaystyle PV. Given parameters: * Future Value (FV\displaystyle FV) = Rs. 25,000\displaystyle \text{Rs. }25,000 * Time (n\displaystyle n) = 10\displaystyle 10 years * Interest Rate (r\displaystyle r) = 6%\displaystyle 6\% p.a., so i=0.06\displaystyle i = 0.06 The formula for the Present Value of a single sum is: PV=FV(1+i)nPV = \frac{FV}{(1+i)^n} Substituting the values: PV=25,000(1.06)10PV = \frac{25,000}{(1.06)^{10}} First, let's calculate (1.06)10\displaystyle (1.06)^{10}: (1.06)101.790848(1.06)^{10} \approx 1.790848 Now substitute this back: PV=25,0001.79084813,959.87PV = \frac{25,000}{1.790848} \approx 13,959.87 Thus, the present value is approximately Rs. 13,960\displaystyle \text{Rs. }13,960. (Note: While some keys mark Option D, the exact mathematical value is Option B). 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