Mathematics of FinanceMCQMTP March 21Question 1515 of 512
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Antil bought a motor cycle costing 1,50,000\displaystyle 1,50,000 by making a down payment of 50,000\displaystyle 50,000 and agreeing to make equal annual payment for five years. How much would be each payment if the interest on unpaid amounts be 10%\displaystyle 10\% compounded annually? [P(5,0.10)=3.79079]\displaystyle [P(5,0.10) = 3.79079]

Options

A26379.66\displaystyle 26379.66
B26370.70\displaystyle 26370.70
C26500.70\displaystyle 26500.70
D26300.70\displaystyle 26300.70
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Correct Answer

Option a26379.66\displaystyle 26379.66

All Options:

  • A26379.66\displaystyle 26379.66
  • B26370.70\displaystyle 26370.70
  • C26500.70\displaystyle 26500.70
  • D26300.70\displaystyle 26300.70

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Detailed Solution & Explanation

The remaining balance to be financed after the down payment is: Balance=1,50,00050,000=1,00,000\text{Balance} = 1,50,000 - 50,000 = 1,00,000 The annual instalment P\displaystyle P is: P=BalanceP(5,0.10)P = \frac{\text{Balance}}{P(5, 0.10)} Given: * Annuity factor P(5,0.10)=3.79079\displaystyle P(5, 0.10) = 3.79079 Substituting the values: P=1,00,0003.7907926,379.66P = \frac{1,00,000}{3.79079} \approx 26,379.66 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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