Mathematics of FinanceMCQPYQ June 24Question 1562 of 512
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You bought a painting 10\displaystyle 10 years ago an investment. You originally paid 85,000\displaystyle 85,000 for it. If you sold it for 4,84,050\displaystyle 4,84,050, what was your annual return on investment?

Options

A47%\displaystyle 47\%
B4.7%\displaystyle 4.7\%
C19%\displaystyle 19\%
D12.8%\displaystyle 12.8\%
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Correct Answer

Option c19%\displaystyle 19\%

All Options:

  • A47%\displaystyle 47\%
  • B4.7%\displaystyle 4.7\%
  • C19%\displaystyle 19\%
  • D12.8%\displaystyle 12.8\%

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Detailed Solution & Explanation

The Compound Annual Growth Rate (CAGR) is: CAGR=(FVPV)1n1\text{CAGR} = \left(\frac{FV}{PV}\right)^{\frac{1}{n}} - 1 Given: * Original cost (PV\displaystyle PV) = 85,000\displaystyle 85,000 * Sale price (FV\displaystyle FV) = 4,84,050\displaystyle 4,84,050 * Time (n\displaystyle n) = 10\displaystyle 10 years Substituting the values: CAGR=(4,84,05085,000)1101=(5.6947)0.111.191=19%\text{CAGR} = \left(\frac{4,84,050}{85,000}\right)^{\frac{1}{10}} - 1 = (5.6947)^{0.1} - 1 \approx 1.19 - 1 = 19\% 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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