Mathematics of FinanceMCQMTP June 24 Series IQuestion 1412 of 512
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The value of furniture depreciates by $10\%$ a year, if the present value of the furniture in an office is $3870$, calculate the value of furniture 3 years ago:

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

✅ Option a — $30,000$

All Options:

  • A$30,000$
  • B$40,000$
  • C$35,000$
  • D$50,000$

Detailed Solution & Explanation

Let the value of the furniture 3\displaystyle 3 years ago be P0\displaystyle P_0. Given parameters: * Present Value (PV\displaystyle PV) = Rs. 21,870\displaystyle Rs. \displaystyle \text{Rs. }21,870 (Note: The value in the question text "3870" is a typographical transcription error from the original exam source Rs. 21,870) * Rate of depreciation (d\displaystyle d) = $10\%p.a.\displaystyle p.a.= 0.10$ * Time (n\displaystyle n) = 3\displaystyle 3 years The formula for depreciated value is: PV=P0(1−d)nPV = P_0 (1 - d)^n Substituting the values: 21,870=P0(1−0.10)321,870 = P_0 (1 - 0.10)^3 21,870=P0(0.9)321,870 = P_0 (0.9)^3 21,870=P0×0.72921,870 = P_0 ×\displaystyle \times 0.729 Solving for P0\displaystyle P_0: P0=21,8700.729=30,000P_0 = 21,8700.729=30\displaystyle \frac{21,870}{0.729} = 30,000 Thus, the value of the furniture 3\displaystyle 3 years ago was Rs. 30,000\displaystyle Rs. \displaystyle \text{Rs. }30,000. 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

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