Mathematics of FinanceMCQMTP Nov 18Question 1488 of 512
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The present value of 1\displaystyle 1 to be receive after 3\displaystyle 3 year compounded annually at 11%\displaystyle 11\% interest is

Options

A0.713\displaystyle 0.713
B0.811\displaystyle 0.811
C0.731\displaystyle 0.731
D0.658\displaystyle 0.658
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Correct Answer

Option a0.713\displaystyle 0.713

All Options:

  • A0.713\displaystyle 0.713
  • B0.811\displaystyle 0.811
  • C0.731\displaystyle 0.731
  • D0.658\displaystyle 0.658

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Detailed Solution & Explanation

The present value (PV\displaystyle PV) of 1\displaystyle 1 is: PV=1(1+i)n=1(1.11)30.731PV = \frac{1}{(1+i)^n} = \frac{1}{(1.11)^3} \approx 0.731 Mathematically, the correct option is Option C (0.731\displaystyle 0.731). However, the official key marks Option A (0.713\displaystyle 0.713). 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

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