Mathematics of FinanceMCQMTP Jun 23 Series IQuestion 1522 of 512
All Questions

10,000\displaystyle 10,000 is invested every month and in an account paying interest @12%\displaystyle @12\% per annum compounded monthly. What is the future value of this annuity just after making 11th\displaystyle 11^{th} payment

Options

A115,600\displaystyle 115,600
B116,100\displaystyle 116,100
C156,800\displaystyle 156,800
D157,100\displaystyle 157,100
For any discrepancies in this question, email contact@cadada.in

Correct Answer

Option a115,600\displaystyle 115,600

All Options:

  • A115,600\displaystyle 115,600
  • B116,100\displaystyle 116,100
  • C156,800\displaystyle 156,800
  • D157,100\displaystyle 157,100

Ad

Detailed Solution & Explanation

The future value (FV\displaystyle FV) of an ordinary annuity compounded monthly is: FV=A[(1+i)n1i]FV = A \left[ \frac{(1+i)^n - 1}{i} \right] Given: * Monthly investment (A\displaystyle A) = 10,000\displaystyle 10,000 * Number of payments (n\displaystyle n) = 11\displaystyle 11 * Nominal rate = 12%\displaystyle 12\% p.a., so periodic rate i=12%12=1%=0.01\displaystyle i = \frac{12\%}{12} = 1\% = 0.01 Substituting the values: FV=10,000[(1.01)1110.01]FV = 10,000 \left[ \frac{(1.01)^{11} - 1}{0.01} \right] Using (1.01)111.115668\displaystyle (1.01)^{11} \approx 1.115668: FV=10,000[1.11566810.01]=10,000×11.5668=1,15,668FV = 10,000 \left[ \frac{1.115668 - 1}{0.01} \right] = 10,000 \times 11.5668 = 1,15,668 This is closest to Option A (115,600\displaystyle 115,600). 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.

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