Rapid Questions Series Aman Khedia

RAPID QUESTIONS
MATHEMATICS OF FINANCE
1. In how many years will a sum of money become four times at 12% p.a. simple
interest?
(a) 18years (b) 21 years
(c) 25 years (d) 28 years

2. The simple interest for a certain sum for 2 years at 10% per annum is Rs. 90. The
corresponding compound interest is (In Rs.):
(a) 99 (b) 95.60
(c) 94.50 (d) 108

3. A person lends Rs. 6,000 for 4 years and Rs. 8,000 for 3 years at simple interest. If he
gets Rs. 2,400 as total interest, the rate of interest is:
(a) 5% (b) 4%
(c) 6% (d) 7%

4. A person borrows Rs. 5,000 for 2 years at 4% per annual simple interest. He
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immediately lends to another person at 6 4 %. Per annual for 2 years find his gain in
the transaction for year:
(a) Rs. 112.50 (b) Rs.225
(c) Rs. 125 (d)Rs.107.50

5. A certain money doubles itself in 10 years when deposited on simple interest. It

6. A certain sum of money Q was deposited for 5 year and 4 months at 4.5% simple
interest and amounted to Rs. 248, then the value of Q is:
(a) Rs. 200 (b) Rs. 210
(c) Rs. 220 (d) Rs. 240

7. In simple interest if the principal is Rs. 2,000 and the rate and time are the roots of
the equation 𝑥 2 − 11𝑥 + 30 = 0 then simple interest is
(a) Rs. 500 (b) Rs. 600
(c) Rs. 700 (d) Rs. 800

8. If the difference between the compound interest compounded annually and simple
interest on a certain amount at 10% per annum for two years is Rs. 372, then the
principal amount is
(a) Rs. 37,200 (b) Rs. 37,000
(c) Rs. 37,500 (d) None

Mathematics of Finance
Rapid Questions Series Aman Khedia

9. How much will Rs. 25,000 amounts to in 2 years at compound interest if the rates for
the successive years are 4% and 5% per year
(a) Rs. 27,300 (b) Rs. 27,000
(c) Rs. 27,500 (d) Rs. 27,900

10. The value of furniture depreciates by 10% a year, it the present value of the furniture
in an office is Rs. 21,870, calculate the value of furniture 3 years ago
(a) Rs. 30,000 (b) Rs. 35,000
(c) Rs. 40,000 (d) Rs. 50,000

11. The effective rate of interest does not depend upon

12. A person wants to lease out a machine costing Rs. 5,00,000 for a 10-year period. It
has fixed a rental of Rs. 51,272 per annum payable annually starting from the end of
first year. Suppose rate of interest is 10% per annum compounded annually on which
money can be invested. To whom this agreement is favourable?
(a) Favour of Lessee (b) Favour of Lessor
(c) Not for both (d) Can't be determined

13. A sum of money is lent at C.I. Rate 20% p.a. 2 years. It would fetch Rs. 482 more if the
interest is compounded half yearly. The sum is:
(a) Rs. 19,800 (b) Rs. 19,900
(c) Rs. 20,000 (d) Rs. 20,100

14. How much amount is required to be invested every year as to accumulate Rs.
7,96,870 at the end of 10 years, if interest compounded annually at 10% given that A
(10, 0.1) = 15.9374?
(a) Rs. 40,000 (b) Rs. 4,50,000
(c) Rs. 48,000 (d) Rs. 50,000

15. Mr. X invest Rs. 10,000 every year starting from today for next: 10 years suppose
interest rate is 8% per annual compounded annually. Calculate future value of the
annuity.
(a) Rs. 1,56,454.88 (b) Rs. 1,56,554.88
(c) Rs. 1,44,865.625 (d) None of these

16. What is the net present value of piece of property which would be valued at Rs. 2
lakhs at the end of 2 years? (Annual rate of increase = 5%)
(a) Rs. 1.81 lakh (b) Rs. 2.01 lakh
(c) Rs. 2.00 lakh (d) None

Mathematics of Finance
Rapid Questions Series Aman Khedia

17. Let a person invest a fixed sum at the end of each month in an account paying interest
12% per year compounded monthly. If the future value of this annuity after the 12th
payment is Rs. 55,000 then the amount invested every month is?
(a) Rs. 4,837 (b) Rs. 4,637
(c) Rs. 4,337 (d) Rs. 3,337

18. Determine the present value of perpetuity of Rs. 50,000 per month @ rate of interest
12% p.a. is _____
(a) Rs. 45,00,000 (b) Rs. 50,00,000
(c) Rs. 55,00,000 (d) Rs. 60,00,000

19. Rs. 2,500 is paid every year for 10 years to pay off a loan. What is the loan amount if
interest rate be 14% per annum compounded annually?
(a) Rs. 15,847.90 (b) Rs. 13,040.27
(c) Rs. 14,674.21 (d) Rs. 16,345.11

20. A stock pays annually an amount of Rs.10 from 6th year onwards. What is the present
value of the perpetuity, if the rate of return is 20%?
(a) 20.1 (b) 19.1
(c) 21.1 (d) 22.1

21. If the nominal rate of growth is 17% and inflation is 9% for the five years. Let P be
the Gross Domestic Product (GDP) amount at the present year then the projected real
GDP after 6 years is:
(a) 1.587 P (b) 1.921 P
(c) 1.403 P (d) 2.51 P

22. A loan of Rs. 1,02,000 is to be paid back in two equal annual instalments. If the rate
of interest is 4% p.a, compounded annually, then the total interest charged {in Rs.)
under this instalment plan is:
(a) 6,160 (b) 8,120
(c) 5,980 (d) 7,560

23. If a person bought a house by paying Rs. 45,00,000 down payment and Rs. 80,000 at
the end of each year till the perpetuity. Assuming the rate of interest as 16% the
present value of house (in Rs.) is given as:
(a) 47,00,000 (b) 45,00,000
(c) 57,80,000 (d) 50,00,000

Mathematics of Finance
Rapid Questions Series Aman Khedia

24. If the cost of capital be 12% per annual, then the net present value (in nearest Rs.)
from the given cash flow is given as:
Years 0 1 2 3
Operating Profit (100) 60 40 50
(a) 31048 (b) 34185
(c) 21048 (d) 24187

25. What is the difference (in Rs.) between the simple interest and the compound
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interest on a sum of Rs.8,000 for 2 5 years at the rate of 10% p.a. when the interest is
compounded yearly?
(a) 136.12 (b) 129.50
(c) 151.75 (d) 147.20

26. A sum of Rs. X amounts to Rs.27,900 in 3 years and to Rs.41,850 in 6 years at a certain
rate percent per annum, when the interest is compounded yearly. The value of x is;
(a) 16,080 (b) 18,600
(c) 18,060 (d) 16,800

27. A company establishes a sinking fund to provide for the payment ₹ 2,00,000 debt
maturing in 20 years. Contribution to the fund is to be made at the end of every year.
Find amount of each deposit if interest is 10% per annum?
(a) ₹ 3,592.11 (b) ₹ 3,491.92
(c) ₹ 3,392.11 (d) None

28. The CAGR of initial value of an investment of ₹ 15,000 and final value of ₹ 25,000 in
3 years is:
(a) 19% (b) 18.56%
(c) 17.56% (d) 17%

29. ABC Ltd. wants to lease out an asset costing ₹ 3,60,000 for a five-year period. It has a
fixed rental of ₹ 1,05,000, per annum payable annually starting from the end of first
year. Suppose rate of interest is 14% per annum compounded annually on which
money can be invested by the company. Is this agreement favorable to the company?
(a) Yes (b) No
(c) Can't Say (d) None

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30. Compute the compound interest on Rs. 6,000 for 1 4 years at 8% per annum. Interest
will be compounded quarterly
(a) 642 (b) 630.78
(c) 634.68 (d) 624.48

Mathematics of Finance
Rapid Questions Series Aman Khedia

31. A machine can be purchased for Rs.50,000. Machine will be contributing Rs.12,000
per year for the next five years. Assuming borrowing cost is 10% per annum.
Determine whether machine should be purchased or not
(a) Should be purchased (b) Should not be purchased
(c) Can’t say about purchase (d) none of the above

32. Certain sum of money borrowed at simple interest amount to Rs.2688 in three years
and to Rs.2784 in four years at the rate per annum equal to
(a) 7% (b) 6%
(c) 5% (d) 4%

33. The time by which a sum of money would treble itself at 8% p.a C.I is
(a) 14.28 years (b) 14 years
(c) 12 years (d) none of these

34. Present value of a five-year annuity is Rs.2,000. If the rate of interest is 8% p.a., what
is the amount of each annuity payment?
(a) Rs.500.9 (b) Rs.463.8
(c) Rs.363.1 (d) Rs.486.4

35. How much time would the simple interest on a certain sum be 0.125 times the
principal at 10% per annum
1 3
(a) 1 4 𝑦𝑒𝑎𝑟𝑠 (b) 1 4 𝑦𝑒𝑎𝑟𝑠
1 3
(c) 2 4 𝑦𝑒𝑎𝑟𝑠 (d) 2 4 𝑦𝑒𝑎𝑟𝑠

36. Madhu takes a loan of Rs.50,000 from ABC Bank LTD. The rate of interest is 10% per
annum. The first installment will be paid at the end of five year. Determine the
amount (in Rs) of equal installments, if Madhu wishes to repay the amount in five
years.
(a) Rs.19,510 (b) Rs.19,430
(c) Rs.19,310 (d) Rs.16,630

37. Present value of a scooter is Rs.7,290 if its value decreases every year by 10% then
its value before 3 years is equal to:
(a) 10,000 (b) 10,500
(c) 20,000 (d) 20,5000

Mathematics of Finance