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CA Foundation · Quantitative Aptitude · Mathematics of Finance

Mrs. Nair deposits ₹8,000 at the end of every year in a scheme paying 10% per annum compounded annually. The scheme matures when the accumulated amount reaches ₹37,128. For how many years does she make deposits?

She deposits for 4 years. Dividing ₹37,128 by ₹8,000 gives a factor of 4.641, which means (1.1ⁿ − 1)/0.1 = 4.641, so 1.1ⁿ = 1.4641 and n = 4. Three years would give only ₹26,480.

  1. A3 years
  2. B4 yearsCorrect
  3. C5 years
  4. D6 years

Explanation

Required factor = 37,128 / 8,000 = 4.641. The factor (1.1ⁿ − 1)/0.1 equals 4.641 when 1.1ⁿ = 1.4641, i.e. n = 4. Check: for n = 3 the FV is 8,000 × 3.31 = ₹26,480, and for n = 5 it is 8,000 × 6.1051 = ₹48,840.

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