Mathematics of FinanceMCQMTP May 19 Series IIQuestion 1498 of 512
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X bought a TV costing 25,000\displaystyle 25,000 making down payment of 5000\displaystyle 5000 and agreeing to make equal annual payment for four years. How much would be each payment if the interest on unpaid amount be 14%\displaystyle 14\% compounded annually?

Options

A6864.10\displaystyle 6864.10
B6850.63\displaystyle 6850.63
C6859\displaystyle 6859
D6871\displaystyle 6871
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Correct Answer

Option a6864.10\displaystyle 6864.10

All Options:

  • A6864.10\displaystyle 6864.10
  • B6850.63\displaystyle 6850.63
  • C6859\displaystyle 6859
  • D6871\displaystyle 6871

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Detailed Solution & Explanation

The unpaid amount (PV\displaystyle PV) to be financed is: PV=25,0005,000=20,000PV = 25,000 - 5,000 = 20,000 The annual payment P\displaystyle P is: P=PVP(4,0.14)=20,0002.91376,864.12P = \frac{PV}{P(4, 0.14)} = \frac{20,000}{2.9137} \approx 6,864.12 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

Exam Strategy Tip

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