CA Foundation · Quantitative Aptitude · Mathematics of Finance
Gupta Traders wants to accumulate ₹2,32,050 at the end of 4 years for expansion. It will deposit an equal sum at the end of each year in a fund earning 10% per annum compounded annually. What should be the annual deposit?
The annual deposit is ₹50,000. The future value factor for 4 year-end payments at 10% is (1.4641 − 1)/0.1 = 4.641, and dividing ₹2,32,050 by 4.641 gives ₹50,000. Dividing simply by 4 ignores interest and overstates the deposit.
- A₹45,455
- B₹46,410
- C₹50,000Correct
- D₹58,012.50
Explanation
FV factor = (1.1⁴ − 1)/0.1 = (1.4641 − 1)/0.1 = 4.641. Deposit = 2,32,050 / 4.641 = ₹50,000. Check: 50,000 × 4.641 = 2,32,050. ₹58,012.50 ignores interest by dividing by 4.
Did you get it right without looking?
One question tells you little. A timed set on Mathematics of Finance shows your real accuracy, how long you take and where you lose marks.
More Mathematics of Finance questions
- A firm will receive ₹5,000 at the end of each of the next 2 years. At a discount rate of 10% per annum, what is the present value of these r…
- Ramesh borrows ₹21,000 at 10% per annum compound interest and agrees to repay it in two equal instalments paid at the end of year 1 and year…
- What sum of money, invested today at 10% per annum compounded annually, will grow to ₹14,641 at the end of 4 years?
- A perpetuity pays ₹5,000 at the end of every year, with the first payment at the end of year 4 (no payments before that). At 10% per annum, …
- Mr. Iyer wants a scheme that pays Rs 6,000 at the end of every year forever, with the first payment one year from today. If the rate of inte…
- Rajesh invests ₹50,000 in a fixed deposit that offers 8% per annum simple interest. How much interest will he earn after 3 years?