Mathematics of FinanceMCQMTP May 19 Series IIQuestion 1500 of 512
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5000\displaystyle 5000 paid for ten years to off a loan. What is the loan amount if interest rate be 14%\displaystyle 14\% per annum compounded annually? [Given P(10,0.14)=5.2161]\displaystyle [Given \ P(10, 0.14) = 5.2161]

Options

A26085.50\displaystyle 26085.50
B26080.55\displaystyle 26080.55
C26280.55\displaystyle 26280.55
D27080.55\displaystyle 27080.55
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Correct Answer

Option a26085.50\displaystyle 26085.50

All Options:

  • A26085.50\displaystyle 26085.50
  • B26080.55\displaystyle 26080.55
  • C26280.55\displaystyle 26280.55
  • D27080.55\displaystyle 27080.55

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Detailed Solution & Explanation

The loan amount (PV\displaystyle PV) is: PV=A×P(10,0.14)PV = A \times P(10, 0.14) Given: * Annual payment (A\displaystyle A) = 5,000\displaystyle 5,000 * Factor P(10,0.14)=5.2161\displaystyle P(10, 0.14) = 5.2161 Substituting the values: PV=5,000×5.2161=26,080.50PV = 5,000 \times 5.2161 = 26,080.50 This is closest to Option A (26,085.50\displaystyle 26,085.50). 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

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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