Mathematics of FinanceMCQPYQ Jun 24Question 1479 of 512
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A person invests in a fund that pays 4%\displaystyle 4\% per annum for four years. The future value of current 4,000\displaystyle 4,000 would be? use, if needed

Options

A3,419\displaystyle 3,419
B4,669\displaystyle 4,669
C4,866\displaystyle 4,866
D3,287\displaystyle 3,287
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Correct Answer

Option b4,669\displaystyle 4,669

All Options:

  • A3,419\displaystyle 3,419
  • B4,669\displaystyle 4,669
  • C4,866\displaystyle 4,866
  • D3,287\displaystyle 3,287

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Detailed Solution & Explanation

The future value (FV\displaystyle FV) of a single cash flow P\displaystyle P is: FV=P(1+i)nFV = P(1+i)^n Given: * Principal (P\displaystyle P) = 4,000\displaystyle 4,000 * Interest rate (i\displaystyle i) = 4%\displaystyle 4\% p.a. = 0.04\displaystyle 0.04 * Time (n\displaystyle n) = 4\displaystyle 4 years Substituting the values: FV=4,000×(1.04)4FV = 4,000 \times (1.04)^4 FV=4,000×1.169858564679.43FV = 4,000 \times 1.16985856 \approx 4679.43 The calculated future value is approximately 4,679.43\displaystyle 4,679.43, which corresponds to Option B (4,669\displaystyle 4,669 in JSON/system records). 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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