Mathematics of FinanceMCQMTP Oct 21, ICAI SMQuestion 1339 of 512
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The difference between Compound Interest and Simple Interest on a certain sum for 2\displaystyle 2 years at 6%\displaystyle 6\% p.a. is $13.50$. Find the sum

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

✅ Option a — $3750$

All Options:

  • A$3750$
  • B$2750$
  • C$4750$
  • Dnone of these

Detailed Solution & Explanation

**Derivation of Principal Sum** Given: - Time (t\displaystyle t) = 2\displaystyle 2 years - Rate of Interest (r\displaystyle r) = 6%\displaystyle 6\% per annum - Difference between Compound Interest and Simple Interest (CI−SI\displaystyle CI - SI) = Rs. 13.50\displaystyle Rs. \displaystyle \text{Rs. }13.50 **Step 1: Use the difference formula for 2 years** Difference=P(r100)2Difference=P\displaystyle \text{Difference} = P \left(r100\displaystyle \frac{r}{100}\right)^2 13.50=P(6100)213.50 = P \left(6100\displaystyle \frac{6}{100}\right)^2 13.50=P(0.06)213.50 = P (0.06)^2 13.50=0.0036P13.50 = 0.0036 P **Step 2: Solve for P\displaystyle P** P=13.500.0036=Rs. 3,750P = \displaystyle \frac{13.50}{0.0036} = \text{Rs. }3,750 Hence, **Option A** 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

Compound Interest

Interest calculated on the initial principal, which also includes all of the accumulated interest of previous periods.

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