Mathematics of FinanceMCQMTP March 21Question 1516 of 512
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Shoba borrows $50,00,000$ to buy a house. If he pays equal installments for $20$ years and $10\%$ interest on outstanding balance, what will be the equal annual installment? $[P(20,0.10) = 8.51356]$

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

✅ Option b — $687298.4$

All Options:

  • A$687298.4$
  • B$687298.4$
  • C$585298.4$
  • D$585298.4$

Detailed Solution & Explanation

The annual instalment P\displaystyle P is: P=PVP(20,0.10)P = PVP(20,0.10)\displaystyle \frac{PV}{P(20, 0.10)} Given: * Loan amount (PV\displaystyle PV) = $50,00,000$ * Annuity factor P(20,0.10)=8.51356\displaystyle P(20, 0.10) = 8.51356 Substituting the values: P=50,00,0008.51356≈5,87,298.43P = 50,00,0008.51356\displaystyle \frac{50,00,000}{8.51356} ≈\displaystyle \approx 5,87,298.43 Mathematically, the instalment is $5,87,298.43$. However, the official key marks Option B ($687298.4$). 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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