Mathematics of FinanceMCQPYQ Dec 22Question 1461 of 512
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Mr. A invested 10,000\displaystyle 10,000 every year for next 3\displaystyle 3 years at the interest rate of 8\displaystyle 8 percent per annum compounded annually. What is future value of the annuity?

Options

A32,644\displaystyle 32,644
B32,464\displaystyle 32,464
C32,640\displaystyle 32,640
D32,460\displaystyle 32,460
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Correct Answer

Option b32,464\displaystyle 32,464

All Options:

  • A32,644\displaystyle 32,644
  • B32,464\displaystyle 32,464
  • C32,640\displaystyle 32,640
  • D32,460\displaystyle 32,460

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Detailed Solution & Explanation

Let the annual investment be A=Rs. 10,000\displaystyle A = \text{Rs. }10,000. Given parameters: * Time (n\displaystyle n) = 3\displaystyle 3 years * Interest Rate (r\displaystyle r) = 8%\displaystyle 8\% p.a. compounded annually, so i=0.08\displaystyle i = 0.08 Assuming it is an ordinary annuity (payments made at the end of each year): FV=A×(1+i)n1iFV = A \times \frac{(1+i)^n - 1}{i} Substituting the values: FV=10,000×(1.08)310.08FV = 10,000 \times \frac{(1.08)^3 - 1}{0.08} FV=10,000×1.25971210.08FV = 10,000 \times \frac{1.259712 - 1}{0.08} FV=10,000×3.2464=32,464FV = 10,000 \times 3.2464 = 32,464 Thus, the future value of the annuity is Rs. 32,464\displaystyle \text{Rs. }32,464. 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

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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.

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