Mathematics of FinanceMCQPYQ June 19Question 1545 of 512
All Questions

What is the net present value of piece of property which would be valued at 2\displaystyle 2 lakh at the end of 2\displaystyle 2 years? (Annual rate of increase =5%\displaystyle = 5\%)

Options

A1.81\displaystyle 1.81 lakh
B2.01\displaystyle 2.01 lakh
C2.00\displaystyle 2.00 lakh
DNone of these
For any discrepancies in this question, email contact@cadada.in

Correct Answer

Option a1.81\displaystyle 1.81 lakh

All Options:

  • A1.81\displaystyle 1.81 lakh
  • B2.01\displaystyle 2.01 lakh
  • C2.00\displaystyle 2.00 lakh
  • DNone of these

Ad

Detailed Solution & Explanation

The net present value (NPV\displaystyle NPV) of the property is its future value discounted back to the present: PV=FV(1+i)nPV = \frac{FV}{(1+i)^n} Given: * Future Value (FV\displaystyle FV) = 2,00,000\displaystyle 2,00,000 (2 lakh) * Time (n\displaystyle n) = 2\displaystyle 2 years * Annual growth rate (i\displaystyle i) = 5%\displaystyle 5\% p.a. = 0.05\displaystyle 0.05 Substituting the values: PV=2,00,000(1.05)2=2,00,0001.10251,81,405.891.81 lakhPV = \frac{2,00,000}{(1.05)^2} = \frac{2,00,000}{1.1025} \approx 1,81,405.89 \approx 1.81 \text{ lakh} 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.

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