CA Foundation · Quantitative Aptitude · Mathematics of Finance
Vikram deposits ₹5,000 at the end of every half-year for 2 years in a scheme paying 20% per annum compounded half-yearly. What will be the accumulated amount at the end of 2 years?
The accumulated amount is ₹23,205. The half-yearly rate is 10% for 4 periods, and the future value factor of an ordinary annuity is (1.1⁴ − 1)/0.1 = 4.641. Multiplying by ₹5,000 gives ₹23,205.
- A₹20,000
- B₹23,205Correct
- C₹25,525.50
- D₹11,000
Explanation
The rate per half-year is 10% and there are 4 periods. FV = 5,000 × [(1.1⁴ − 1)/0.1] = 5,000 × 4.641 = ₹23,205. The value ₹25,525.50 treats the deposits as made at the start of each half-year (annuity due), and ₹11,000 wrongly uses annual periods with 2 payments.
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