Mrs. X invests in an annuity immediately that promises annual payments of $50,000 for the next $16 years. If the interest rate is 6% compounded annually then the approximate present value of this annuity is

Option B: $5,75,900.00$. Solution: PYQ Dec 23

Mrs. X invests in an annuity immediately that promises annual payments of $50,000 for the next $16 years. If the interest rate is 6% compounded annually then the approximate present value of this annuity is

The correct answer is Option B: $5,75,900.00$. PYQ Dec 23

Mathematics of FinanceMCQPYQ Dec 23Question 6595 of 108

All Questions

Mrs. X invests in an annuity immediately that promises annual payments of $50,000$ for the next $16$ years. If the interest rate is $\displaystyle 6\%$ compounded annually then the approximate present value of this annuity is

Select Your Answer (Keyboard: A, B, C, D)

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Correct Answer

✅ Option B — $5,75,900.00$

All Options:

A$5,51,217.75$
B$5,75,900.00$ ✓
C$5,05,288.08$
D$5,35,617.45$

Detailed Solution & Explanation

PYQ Dec 23

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

Annuity

A sequence of equal periodic payments made at equal intervals of time.

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Mrs. X invests in an annuity immediately that promises annual payments of $50,000$ for the next $16$ years. If the interest rate is 6%\displaystyle 6\%6% compounded annually then the approximate present value of this annuity is