Mathematics of FinancePYQ Jan 26Question 4207 of 507
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Bank B provides loans at 15% per annum compound interest. If Mr. XYZ borrowed ₹ 3,200 for 2 years from Bank B, then how much interest must Mr. XYZ pay to his bank?

Options

A₹ 400
B₹ 960
C₹ 4,232
D₹ 1,032
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Correct Answer

Option d₹ 1,032

All Options:

  • A₹ 400
  • B₹ 960
  • C₹ 4,232
  • D₹ 1,032

Detailed Solution & Explanation

Given data:
- Principal (P\displaystyle P) = ₹ 3,200\displaystyle 3,200
- Rate of interest (r\displaystyle r) = 15%\displaystyle 15\% per annum compounded annually
- Time (t\displaystyle t) = 2\displaystyle 2 years

The compound interest formula for the total amount (A\displaystyle A) is:
A=P(1+r)tA = P(1 + r)^t
Substitute the given values:
A=3200(1+0.15)2A = 3200(1 + 0.15)^2
A=3200(1.15)2A = 3200(1.15)^2
A=3200×1.3225A = 3200 \times 1.3225
A=₹ 4,232A = \text{₹ } 4,232

The interest (CI\displaystyle CI) that Mr. XYZ must pay is the difference between the total amount and the principal:
CI=APCI = A - P
CI=42323200=₹ 1,032CI = 4232 - 3200 = \text{₹ } 1,032

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

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

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