CA Foundation · Quantitative Aptitude · Mathematics of Finance
What sum of money, invested today at 10% per annum compounded annually, will grow to ₹14,641 at the end of 4 years?
The present value is ₹10,000. Dividing the future sum of ₹14,641 by the compounding factor (1.10)^4, which equals 1.4641, gives ₹10,000, and investing that amount for four years at 10% compounded annually returns exactly ₹14,641.
- A₹10,000Correct
- B₹9,500
- C₹10,500
- D₹11,000
Explanation
PV = 14,641 / (1.1)^4. Since 1.1^4 = 1.4641, PV = 14,641 / 1.4641 = ₹10,000. Check: 10,000 × 1.4641 = 14,641. Using simple discounting (14,641 less 40%) would give a wrong figure.
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
- Verma takes a loan of ₹1,00,000 at 10% per annum compounded annually, repayable in two equal annual instalments at the end of each year. Giv…
- Find the compound interest on ₹40,000 for 6 months at 8% per annum, compounded quarterly.
- A trust wants to give a scholarship of ₹15,000 at the end of every year forever, with the first payment one year from now. If money earns 7.…
- Meera wants to build a fund of ₹3,31,000 at the end of 3 years. She will deposit a fixed sum at the beginning of each year for 3 years in a …
- The population of a town increases at a constant compound annual growth rate. If it was 50,000 at the start and grows at 10% per annum, what…
- Bank A offers 8% per annum compounded half-yearly. Bank B offers 8.2% per annum compounded annually. Which is the better option for a deposi…