Mathematics of FinanceMCQMTP June 24 Series IIQuestion 1535 of 512
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Arslan invested 10,000\displaystyle 10,000 at 8%\displaystyle 8\% per annum compound quarterly, then the value of the investment after 2\displaystyle 2 years is

Options

A11,716.59\displaystyle 11,716.59
B10,716.59\displaystyle 10,716.59
C11,716.59\displaystyle 11,716.59
DNone of these
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Correct Answer

Option c11,716.59\displaystyle 11,716.59

All Options:

  • A11,716.59\displaystyle 11,716.59
  • B10,716.59\displaystyle 10,716.59
  • C11,716.59\displaystyle 11,716.59
  • DNone of these

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Detailed Solution & Explanation

The value of the investment (A\displaystyle A) after compounding quarterly is: A=P(1+rm)mnA = P \left(1 + \frac{r}{m}\right)^{m \cdot n} Given: * Principal (P\displaystyle P) = 10,000\displaystyle 10,000 * Nominal rate (r\displaystyle r) = 8%\displaystyle 8\% p.a. = 0.08\displaystyle 0.08 * Compounding frequency (m\displaystyle m) = 4\displaystyle 4 (quarterly) * Time (n\displaystyle n) = 2\displaystyle 2 years Substituting the values: A=10,000(1+0.084)4×2=10,000×(1.02)8A = 10,000 \left(1 + \frac{0.08}{4}\right)^{4 \times 2} = 10,000 \times (1.02)^8 Using (1.02)81.171659\displaystyle (1.02)^8 \approx 1.171659: A=10,000×1.171659=11,716.59A = 10,000 \times 1.171659 = 11,716.59 This matches Option C. Hence, **Option C** 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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