Mathematics of FinancePYQ Sept 25Question 4120 of 507
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One person wants to have ₹ 20,000 at the end of six years. Hence, he deposits ₹ _________ (rounded in rupee) in a fund that pays 3% per annum, compounded annually. (Given : 1.036=1.194\displaystyle 1.03^6 = 1.194)

Options

A17,000
B17,250
C17,750
D16,750
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Correct Answer

Option d16,750

All Options:

  • A17,000
  • B17,250
  • C17,750
  • D16,750

Detailed Solution & Explanation

Given: Future Value (FV\displaystyle FV) = ₹ 20,000 Time (n\displaystyle n) = 6 years Interest rate (r\displaystyle r) = 3%=0.03\displaystyle 3\% = 0.03 compounded annually
The formula relating Present Value (PV\displaystyle PV) and Future Value (FV\displaystyle FV) is: FV=PV(1+r)nFV = PV(1+r)^n Substitute the values: 20,000=PV(1.03)620,000 = PV(1.03)^6
Given that (1.03)6=1.194\displaystyle (1.03)^6 = 1.194: 20,000=PV×1.19420,000 = PV \times 1.194 PV=20,0001.19416750.42 rupeesPV = \frac{20,000}{1.194} \approx 16750.42\text{ rupees} Rounding to the nearest rupee, we get ₹ 16,750.
Hence, **Option D** 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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