CA Foundation · Quantitative Aptitude · Mathematics of Finance
Deepa deposits ₹6,000 at the end of each year for 3 years in an account paying 10% per annum compounded annually. She leaves the accumulated sum untouched for a further 2 years at the same rate. What is the amount at the end of 5 years?
The amount at the end of 5 years is ₹24,030.60. The three deposits first grow to ₹19,860 at the end of year 3 (6,000 × 3.31). That lump sum then compounds for two more years at 10%, giving 19,860 × 1.21 = ₹24,030.60.
- A₹19,860
- B₹21,846
- C₹24,030.60Correct
- D₹36,630.60
Explanation
FV at end of year 3 = 6,000 × (1.1³ − 1)/0.1 = 6,000 × 3.31 = ₹19,860. This grows for 2 more years: 19,860 × 1.21 = ₹24,030.60. ₹21,846 grows it for only one year, and ₹36,630.60 wrongly assumes five annual payments.
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