Mathematics of FinanceMCQPYQ June 19Question 1189 of 512
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The certain sum of money became Rs. 692\displaystyle Rs. \displaystyle \text{Rs. }692 in 2\displaystyle 2 years and Rs. 800\displaystyle Rs. \displaystyle \text{Rs. }800 in 5\displaystyle 5 years then the principal amount is

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

✅ Option b — Rs. 620\displaystyle \text{Rs. }620

All Options:

  • ARs. 520\displaystyle \text{Rs. }520
  • BRs. 620\displaystyle \text{Rs. }620
  • CRs. 720\displaystyle \text{Rs. }720
  • DRs. 820\displaystyle \text{Rs. }820

Detailed Solution & Explanation

**Derivation of Principal under Simple Interest** Given: - Amount after 2\displaystyle 2 years (A2\displaystyle A_2) = Rs. 692\displaystyle Rs. \displaystyle \text{Rs. }692 - Amount after 5\displaystyle 5 years (A5\displaystyle A_5) = Rs. 800\displaystyle Rs. \displaystyle \text{Rs. }800 **Step 1: Find Simple Interest per year (I\displaystyle I)** Simple Interest remains constant each year: Interest for 3 years (5−2)=A5−A2=800−692=Rs. 108Interest for \displaystyle \text{Interest for } 3  years \displaystyle \text{ years } (5 - 2) = A_5 - A_2 = 800 - 692 = Rs. \displaystyle \text{Rs. }108 Interest per year (I)=1083=Rs. 36Interest per year \displaystyle \text{Interest per year } (I) = \displaystyle \frac{108}{3} = \text{Rs. }36 **Step 2: Find the Principal (P\displaystyle P)** Using the amount equation for 2\displaystyle 2 years: A2=P+2IA_2 = P + 2I 692=P+2(36)692 = P + 2(36) 692=P+72692 = P + 72 P=692−72=Rs. 620P = 692 - 72 = Rs. \displaystyle \text{Rs. }620 Hence, **Option B** 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.

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