Basics of Financial Mathematics Test 5

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Basics of Financial Mathematics Test 5

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Weekly Quiz Competition

Question 1
1 / -0

A sum of Rs.$$12,000$$ is invested for $$3$$ years at $$18$$ % per annum compound interest. Calculate the interest for the third year.

A
$$2700$$

B
$$2800$$

C
$$2900$$

D
$$3000$$

Solution

Interest for the first year =$$ \cfrac{12000 \times 1 \times 18}{100} = 2160$$
Amount after first year = $$12000+2160 =14160$$
Interest for second year =$$ \cfrac{14160 \times 1 \times 18}{100} = 2550$$
Amount after second year = $$14160+2550 =16708.8$$
Interest for third year =$$ \cfrac{16708.8 \times 1 \times 18}{100} = 3000(approx)$$
Question 2
1 / -0

A sum of Rs.$$25,000$$ is invested for $$3$$ years at $$20$$ % per annum compound interest. Calculate the interest for the third year.

A
$$6000$$

B
$$7200$$

C
$$8400$$

D
$$5000$$

Solution

Interest for the first year =$$ \cfrac{25000 \times 1 \times 20}{100} = 5000$$
Amount after first year = $$25000+5000 =30000$$
Interest for second year =$$ \cfrac{30000 \times 1 \times 20}{100} = 6000$$
Amount after second year = $$30000+6000 =36000$$
Interest for third year =$$ \cfrac{36000 \times 1 \times 20}{100} = 7200(approx)$$
Question 3
1 / -0

At what rate of compound interest per annum will a sum or Rs. 1200 becomes 1348.32 in 2 years?

A
4%

B
6%

C
7.5%

D
None

Solution

solution:
the formula for compound interest is:
$$A=P (1+\dfrac{r}{n})^{nt}$$
1348.32 = $$1200 (1+\dfrac{r}{n})^{nt}$$
$$\dfrac{1348.32}{1200} $$= $$(1+\dfrac{r}{n})^{nt}$$
$$1.123$$ = $$(1+\dfrac{r}{100})^{2}$$
$$1 - 1.059$$ x 100 = r
r = 6%
hence the correct opt: B
Question 4
1 / -0

Find the rate of interest if the interest Rs.$$1323$$ is earned on Rs.$$4200 $$for$$ 3.5$$ years ?

A
$$R=9\%$$

B
$$R=10\%$$

C
$$R=12\%$$

D
$$R=14\%$$

Solution

$$SI=\dfrac {PTR}{100}$$
$$1323=\dfrac {4200 \times 3.5 \times R}{100}$$
$$1323=R\times 147$$
$$\therefore R=\dfrac {1323}{147}$$
$$=9\%$$
Question 5
1 / -0

I invested $$Rs. 500$$ in the bank for a year. I neither deposited nor withdrew any money from my account. At the end of the year, I checked my account and found that I have $$Rs. 600$$ in it. What is this extra amount called as?

A
Principal

B
Profit

C
Interest

D
Deposit

Solution

For every deposit made in a bank account, an interest is paid at a fixed rate which is added to the principal amount. This extra amount added to the balance is known as 'Interest'.
Question 6
1 / -0

A sum of Rs.$$12,000$$ is invested for $$3$$ years at $$18$$ % per annum compound interest. Calculate the interest for the second year.

A
$$2500$$

B
$$2525$$

C
$$2550$$

D
$$2575$$

Solution

Interest for first year = $$ \cfrac{12000 \times 1 \times 18}{100} = 2160$$
Amount after first year = $$ 12000+2160=14160$$
Interest for second year =$$ \cfrac{14160 \times 1 \times 18}{100} = 2550(approx)$$
Question 7
1 / -0

An annuity whose payments continue till the happening of an event, the date of which cannot be foretold is called.

A
Contingent Annuity

B
Deferred Annuity

C
Perpetual Annuity

D
Annuity certain

Solution

An annuity whose payments continue till the happening of an event, the date of which cannot be foretold is called contingent annuity.
Question 8
1 / -0

The compound interest on $$Rs. 64,000$$ for $$3$$ years, compounded annually at $$7.5$$% per annum is

A
$$Rs. 14,400$$

B
$$Rs. 15,705$$

C
$$Rs. 15,507$$

D
$$Rs. 15,075$$

Solution

$$Principal = 64000$$
$$Rate = 7.5\% \,p.a$$
$$Time = 3 years$$
$$\text{Where r is the rate and t is the time.}$$
$$CI = 64000 (1 + 7.5/100)^3 - 64000$$
$$= 64000 (1 + 75/1000)^3 - 64000$$
$$= 64000 (1 + 3/40)^3 - 64000$$
$$= 64000 \times(43/40)^3 - 64000$$
$$= 64000 \times(43/40 \times 43/40 \times 43/40) - 64000$$
$$= (43 \times 43 \times 43) - 64000$$
$$= 79507 - 64000$$
$$= 15507$$
$$\text{Hence CI will be 15507 rupees}$$
Question 9
1 / -0

If the periodic payments are all equal, the annuity is called level of.

A
Deferred Annuity

B
Uniform Annuity

C
Forborne Annuity

D
Immediate Annuity

Solution

If the periodic payments are all equal, the annuity is called level of uniform annuity.
Question 10
1 / -0

If $$P=5,000$$, $$T=1$$, $$S.I.=$$Rs. $$300$$, R will be.

A
$$5\%$$

B
$$4\%$$

C
$$6\%$$

D
None of the above

Solution

Given
$$I = Rs\ 300$$
$$P= Rs\ 5000$$
$$T= 1$$
Apply the formula for simple interest
$$ I = \cfrac{P\times R \times T }{100}$$
$$ 300 = \cfrac{5000 \times 1 \times R }{100 }$$
$$ R= \cfrac{300 }{50} = 6$$%
Hence option (C) is correct option

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Basics of Financial Mathematics Test 5

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Basics of Financial Mathematics Test 5

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SHARING IS CARING

Question 1

$$2700$$

$$2800$$

$$2900$$

$$3000$$

Solution

Question 2

$$6000$$

$$7200$$

$$8400$$

$$5000$$

Solution

Question 3

4%

6%

7.5%

None

Solution

Question 4

$$R=9\%$$

$$R=10\%$$

$$R=12\%$$

$$R=14\%$$

Solution

Question 5

Principal

Profit

Interest

Deposit

Solution

Question 6

$$2500$$

$$2525$$

$$2550$$

$$2575$$

Solution

Question 7

Contingent Annuity

Deferred Annuity

Perpetual Annuity

Annuity certain

Solution

Question 8

$$Rs. 14,400$$

$$Rs. 15,705$$

$$Rs. 15,507$$

$$Rs. 15,075$$

Solution

Question 9

Deferred Annuity

Uniform Annuity

Forborne Annuity

Immediate Annuity

Solution

Question 10

$$5\%$$

$$4\%$$

$$6\%$$

None of the above

Solution

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