Mathematics of FinanceMCQMTP May 19 Series IIQuestion 1499 of 512
All Questions

The future value of annuity on 5000\displaystyle 5000 a year for 7\displaystyle 7 years at 14%\displaystyle 14\% per annum compounded interest is

Options

A53300\displaystyle 53300
B5365.87\displaystyle 5365.87
C5480\displaystyle 5480
D5465.23\displaystyle 5465.23
For any discrepancies in this question, email contact@cadada.in

Correct Answer

Option b5365.87\displaystyle 5365.87

All Options:

  • A53300\displaystyle 53300
  • B5365.87\displaystyle 5365.87
  • C5480\displaystyle 5480
  • D5465.23\displaystyle 5465.23

Ad

Detailed Solution & Explanation

If the annual payment is A=500\displaystyle A = 500, the future value (FV\displaystyle FV) is: FV=A[(1+i)n1i]FV = A \left[ \frac{(1+i)^n - 1}{i} \right] Given: * Annual payment (A\displaystyle A) = 500\displaystyle 500 * Time (n\displaystyle n) = 7\displaystyle 7 years * Interest rate (i\displaystyle i) = 14%\displaystyle 14\% p.a. = 0.14\displaystyle 0.14 Substituting the values: FV=500[(1.14)710.14]500×10.7307=5,365.35FV = 500 \left[ \frac{(1.14)^7 - 1}{0.14} \right] \approx 500 \times 10.7307 = 5,365.35 This matches Option B (5365.87\displaystyle 5365.87). 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