Mathematics of FinanceMCQMTP Nov 19Question 1503 of 512
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Anil bought a motor cycle costing 1,30,000\displaystyle 1,30,000 by making a down payment of 30,000\displaystyle 30,000 and agreeing to make equal annual payment for five years. How much would be each payment if the interest on unpaid amount be 10%\displaystyle 10\% compounded annually? [P(5,0.10)=3.7908]\displaystyle [P(5, 0.10) = 3.7908].

Options

A28379.70\displaystyle 28379.70
B26300.70\displaystyle 26300.70
C26500.70\displaystyle 26500.70
D26379.70\displaystyle 26379.70
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Correct Answer

Option b26300.70\displaystyle 26300.70

All Options:

  • A28379.70\displaystyle 28379.70
  • B26300.70\displaystyle 26300.70
  • C26500.70\displaystyle 26500.70
  • D26379.70\displaystyle 26379.70

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Detailed Solution & Explanation

The unpaid balance (PV\displaystyle PV) is: PV=1,30,00030,000=1,00,000PV = 1,30,000 - 30,000 = 1,00,000 The annual instalment P\displaystyle P is: P=PVP(5,0.10)=1,00,0003.790826,379.66P = \frac{PV}{P(5, 0.10)} = \frac{1,00,000}{3.7908} \approx 26,379.66 Mathematically, this corresponds to Option D (26379.70\displaystyle 26379.70). However, the official key marks Option B (26300.70\displaystyle 26300.70). 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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