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CA Foundation · Quantitative Aptitude · Mathematics of Finance

Anita deposits ₹5,000 at the end of every year in an account paying 10% per annum compounded annually. After how many years will the accumulated amount be ₹16,550?

It takes 3 years. Setting 5,000 × [(1.1)^n − 1]/0.1 equal to 16,550 gives (1.1)^n = 1.331, which is 1.1 cubed. Hence n = 3, confirmed by 5,000 × (1.21 + 1.10 + 1) = 16,550.

  1. A2 years
  2. B4 years
  3. C5 years
  4. D3 yearsCorrect

Explanation

FV = 5,000 × [(1.1)^n − 1]/0.1 = 16,550, so [(1.1)^n − 1]/0.1 = 3.31 and (1.1)^n = 1.331, which gives n = 3. Check: 5,000 × (1.21 + 1.10 + 1) = 5,000 × 3.31 = 16,550. Choosing 4 years would give 5,000 × 4.641 = 23,205.

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