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Mathematics of Finance
Q.1) If P = ₹8,500, A = ₹ 10,200 and R = 12 ½ % then T will be:
(a) 1 yr. 7 months. (b) 2 yrs. (c) 1 ½ yr. (d) None of these
Sol. (a)
𝑃𝑅𝑇
As we know, S.I. = 100
S. I.× 100 1700 × 100 × 2
∴ T= = (∵ Simple interest = Amount − Principal = ₹1700)
PR 8500 × 25
8 3
𝐓 = 5 years = 1 5
years = 𝟏 𝐲𝐞𝐚𝐫 𝟕 𝐦𝐨𝐧𝐭𝐡𝐬 (approx.)

Q. 2) Amount and S.I. on ₹ 3,500 for 3 years at 12 % p.a. is:

(a) ₹ 3800 (b) ₹ 4,760 (c) ₹ 3500 (d) None of these
Sol. (b)
𝑃𝑅𝑇 R
S. I. = P𝑖T or (∵ 𝑖 = )
100 100
12
= ₹ 3500 × 100 × 3 = ₹ 1260

∴ 𝐀𝐦𝐨𝐮𝐧𝐭 = Principal + Interest = 3500 + 1260 = ₹ 4760

Q. 3) A sum of amount to ₹ 6200 in 2 years and ₹ 7400 in 3 years. The principal and rate of interest
are:
(a) ₹ 3800, 31.57% p.a. (b) ₹ 3,000, 31.57% p.a. (c) ₹ 3500, 31.57% p.a. (d) None of these
Sol. (a)
𝑃𝑅𝑇
As we know, Amount = Principal + Interest = (𝑃 + 100 )
𝑅𝑇
⟹ 𝐴 = 𝑃 (1 + )
100
Given. Amount at end of 2 years= ₹6,200
and Amount at end of 3 years= ₹7,400
∴ Difference of amount of 2 year and 3 year is simple interest (one year) = ₹7400 - ₹6200 = ₹1200
∴ Simple interest for two years = ₹1200× 2 = ₹2400
∴ Principal = Amount at end of 2year – Simple interest for 2 years
Principal = ₹6,200 − ₹2,400 = ₹ 3,800
1,200
∴ Rate of interest = 3,800 × 100 = 𝟑𝟏. 𝟓𝟕 % p.a.

Q.4) In what time will ₹ 8000 at 3% per annum produce the same interest as ₹ 6000 does in 5 years
at 4% simple interest is?
(a) 4 years (b) 5 years (c) 3 years (d) None of these
Sol. (b)
Let the time be t.
𝑃𝑅𝑇
As we know, 𝑆𝐼 = 100
8000×3×𝑡 6000×5×4
According to the question, 100 = 100
⟹ 240𝑡 = 1200 ∴ 𝒕 = 𝟓 years

Q.5) A sum of money doubles itself in 10 years. The number of years it would triple itself is:
(a) 25 years. (b) 15 years. (c) 20 years (d) None of these
Sol. (c)
Given. A = 2P and T = 10 ∴ S. I. = P
𝑆.𝐼.×100 𝑃×100
As we know, 𝑅 = 𝑃×𝑇 = 𝑃×10 = 10%
𝑆.𝐼.×100 2𝑃×100
Now, 𝑇 = = = 20 years (∵ 𝐼 = 3𝑃 − 𝑃 = 2𝑃)
𝑃×𝑅 𝑃×10

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Q.6) If the simple interest for 6 years is equal to 30% of the principal, then interest will be equal to
the principal after how many years?
(a) 20 years (b) 30 years (c) 10 years (d) 22 years
Sol. (a)
Let the principal be ₹ 𝑥, and the rate of interest be R%.
30
Then, S.I. = 30% of 𝑥 = 100 × 𝑥
𝑃𝑅𝑇
Applying Formula of S.I. = 100
30 𝑥×𝑅×6
⟹ ×𝑥 = ⟹ R = 5%
100 100
Let the time in which the principal is equal to simple interest be ‘𝑡’ years.
𝑥×5×𝑡 100
⟹ 𝑥 = 100 ⟹𝑡= 5 ∴ 𝒕 = 𝟐𝟎 years

Q.7) A sum of ₹ 725 is lent at the beginning of the year at a certain rate of interest. After 8 months,
add a sum of ₹ 362.50 more is lent but at a rate twice the former. At the end of the year, ₹ 33.50
is earned as interest from both loans. What was the original rate of interest?
(a) 2.77% p.a. (b) 2.50% p.a. (c) 6% p.a. (d) 5% p.a.
Sol. (a)
We have, let the rate of interest is R% p.a. and time for the original rate is for 8 months, and the
new rate is for only 4 months.
𝑃𝑅𝑇
As we know, S. I. =
100
725 × R × 8 (725 + 362.50) × 2R × 4
⟹ 33.50 = [ ]+[ ]
100 × 12 100 × 12
1450R 2175R
⟹ 33.50 = +
300 300
⟹ 33.50 × 300 = (1450 + 2175)R
∴ 𝐑 = 𝟐. 𝟕𝟕% 𝐩. 𝐚.

Q.8) A father wants to divide 18750 between his two sons. One is 12 years old, and the other is 14
years old. Father wants that at the rate of 5% per annum, his both sons will get the same
amount at the age of 18. Find the sum that should be allotted to the elder son:
(a) ₹ 9,000 (b) ₹ 9,750 (c) ₹ 9,500 (d) ₹ 10,000
Sol. (b)
Let the younger son allotted amount to be ₹ 𝑥 and the elder son ₹(18750 – 𝑥).
𝑥×5×6 (18750 − 𝑥) × 5 × 4
⟹𝑥+ = (18750 − 𝑥) +
100 100
30𝑥 20𝑥
⟹𝑥+ = (18750 − 𝑥) + 3750 −
100 100
30𝑥 20𝑥
⟹𝑥+𝑥+ + = 18750 + 3750
100 100
𝑥
⟹ 2𝑥 + = 22500 ⟹ 𝑥 = ₹ 9,000
2
∴ The elder son allotted amount = (𝟏𝟖, 𝟕𝟓𝟎 – 𝟗, 𝟎𝟎𝟎) = ₹ 𝟗, 𝟕𝟓𝟎

Q.9) A computer is available for ₹ 39,000 cash or ₹ 17,000 as cash down payment followed by five
monthly instalments of ₹ 4800 each. What is the rate of interest under the instalment plan?
(a) 35.71 % p.a. (b) 36.71% p.a. (c) 37.71% p.a. (d) 38.71% p.a.
Sol. (d)
The total cost of computer = ₹ 39,000
Down payment =₹ 17,000 and Balance = ₹39,000 – ₹17,000 =₹ 22,000
Let the rate of interest be R% p.a.
Balance Amount Instalment Outstanding Amount for Interest
(₹) (₹) (At the end of each month) (₹)
22,000 4800 22000
22000 4800 17,200
17200 4800 12,400

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12,400 4800 7,600

7,600 4800 2,800
24000 Total amount outstanding = 62,000
Total amount paid for computer = ₹41,000 and cash price of the computer = ₹39,000
Interest on the instalments = ₹2,000
𝑃𝑅𝑇
We have, S. I. = = 2000
100
62000 × R × 1
= = 2000
100 × 12
620 × R
= = 2000
12
2000 × 12
∴𝐑= = 𝟑𝟖. 𝟕𝟏% 𝐩. 𝐚.
620

Q.10) A person invest an amount of ₹ 2200 in two parts. If the ratio of rates of two investments is
1 1
4:5 and ratio of their respective time is 2 2 ∶ 3 2 then the interest produced in both parts are
equal find the 1st part?
(a) ₹ 1000 (b) ₹ 1200 (c) ₹ 1400 (d) None of these
Sol. (c)
Let the 1st part be 𝑥, and 2nd part be 𝑦.
Let the rate of interest of both investment = 4𝑟 and 5r
5𝑡 7𝑡
Let the time of both investment = 2 and 2
Hence, 𝑥 + 𝑦 = 2200 ⟹ 𝑦 = 2200 − 𝑥 … (i)
According to question,
𝑥 × 4𝑟 × 5𝑡 𝑦 × 5𝑟 × 7𝑡
⟹ =
100 × 2 100 × 2
⟹ 20𝑥 = 35y ⟹ 20𝑥 = 35(2200 − 𝑥) … [From (i)
⟹ 55𝑥 = 77000 ∴ 𝑥 = ₹ 1400

Q.11) A sum of ₹ 1440 is lent out in three parts in such a way that the interests on first parts at 2%
for 3 years, the second part at 3% for 4 years and the third part at 4% for 5 years are equal.
Then the difference between the largest and the smallest is:
(a) ₹ 200 (b) ₹ 400 (c) ₹ 560 (d) ₹ 500
Sol. (c)
Let the first, second and third parts be 𝑥, y and z, respectively.
According to question,
𝑥×2×3 𝑦×3×4 𝑧×4×5
⟹ = =
100 100 100
6𝑥 12𝑦 20𝑧
⟹ = =
100 100 100
⟹ 6𝑥 = 12𝑦 = 20𝑧 = K (Let)
K K K
⟹ 𝑥 = ,𝑦 = ,𝑧 =
6 12 20
K K K
⟹𝑥+𝑦+𝑧 = + + = 1440
6 12 20
10K + 5K + 3K
⟹ = 1440
60
⟹ 18K = 1440 × 60 ∴ K = 4800
4800 4800 4800
⟹𝑥= = ₹ 800, 𝑦= = ₹ 400, 𝑧= = ₹ 240
6 12 20
∴ Difference of largest and smallest = 800 − 240 = ₹ 560

Q.12) A boy aged 12 years is left with ₹1,00,000, which is under a trust. The trustees invest the money
at 6% per annum and pay the minor by a sum of ₹2500 for his pocket money at the end of each
year. The expenses of trust come out to be ₹500 per annum. Find the amount that will be
handed over to the minor boy after he attains the age of 18 years.

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(a) ₹ 1,25,000 (b) ₹ 1,18,000 (c) ₹ 1,50,000 (d) ₹ 1,20,000

Sol. (b)
Given. P = ₹1,00,000, and 𝑟 = 6%
Total Expenses = 2500 + 500 = ₹ 3000
𝑃𝑅𝑇 100000 × 6 × 1
S. I. = = = ₹ 6000
100 100
Saving = 6000 – 3000 = ₹3000
Interest till 18 years = 3000 × 6 = ₹18,000
∴ Amount handed over to the minor boy after he attains the age of 18 years
= 100000 + 18000 = ₹1,18,000

Q.13) In order to buy a car, a man borrowed ₹ 1,80,000 on the condition that he had to pay 7.5%
interest every year. He also agreed to repay the principal in equal annual instalments over 21
years. After a certain number of years, however, the rate of interest has been reduced to 7%. It
is also known that at the end of the agreed period, he will have paid in all ₹ 2,70,900 in
interest. For how many years does he pay at the reduced interest rate?
(a) 7 years (b) 12 years (c) 14 years (d) 16 years
Sol. (c)
If he pays 7.5% for n years and then 7% for the remaining 21 − 𝑛 years on ₹ 1,80,000, then he
pays this much interest:
7.5 7
⟹( ) (180,000)(𝑛) + ( ) (180,000)(21 − 𝑛)
100 100
That's equal to ₹270,900, so we have
7.5 7
⟹( ) (180,000)(𝑛) + ( ) (180,000)(21 − 𝑛) = 2,70,900
100 100
⟹ (7.5)(1800)(𝑛) + (7)(1800)(21 − 𝑛) = 2,70,900
270,900 301
⟹ 7.5𝑛 + 147 − 7𝑛 = =
1800 2
⟹ 15𝑛 + 294 − 14𝑛 = 301
∴ 𝑛 = 7 years
He pays at the reduced interest rate for 14 years.

Q.14) Three amounts P, Q and R such that Q is the simple interest on P and R is the simple interest
on Q. If in all the cases, rate of interest per annum and the time for which interest is calculated
is the same, then the relation between P, Q and R is:
(a) PQR = 1 (b) P2 = QR (c) Q2 = PR (d) R = P2Q
Sol. (c)
Let the rate be r and the time be ‘t’ in both cases.
𝑃×𝑟×𝑡
We have, Q = … (i)
100
𝑄×𝑟×𝑡
⟹R= 100
… (ii)

Dividing equations (i) from (ii), we get

Q 𝑃
⟹ =
R 𝑄
∴ Q2 =PR

Q.15) A person invested ₹5,000 at some rate of simple interest and ₹4,000 at 1% higher rate of
interest. If the interest in both the case after 4 years is same, the rate of interest in the former
case is
(a) 4% p.a. (b) 6% p.a. (c) 8% p.a. (d) 2% p.a.
Sol. (a)
Let the rate be 𝑥.
𝑃𝑅𝑇
We have, S. I. = 100
According to question,

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5000 × 𝑥 × 4 4000 × (𝑥+1) × 4

⟹ 100
= 100
⇒ 5𝑥 = 4(𝑥 + 1) ⇒ 5𝑥 = 4𝑥 + 1
∴ 𝒙 = 4% p.a.

Q.16) An automobile financier claims to be lending money at simple interest, but he includes the
interest every six months for calculating the principal. If he is charging an interest of 10%, the
effective rate of interest becomes:
(a) 10% p.a. (b) 10.25% p.a. (c) 10.5% p.a. (d) None of these
Sol. (b)
Let the sum of ₹ 100
100×10×1
S.I. for first 6 months = =₹5
100×2
105×10×1
S.I. for last 6 months = = ₹ 5.25
100×2
So, amount at the end of 1 year = (100 + 5 + 5.25) = ₹ 110.25
∴ Effective rate = 110.25 – 100 = 10.25% p.a.

Q.17) Mr. X borrowed ₹ 5,120 at 12 ½ % p.a. C.I. At the end of 3 years, the money was repaid along
with interest accrued. The total amount paid by him is:
(a) ₹ 7,100 (b) ₹ 7,290 (c) ₹ 7,000 (d) None of these
Sol. (b)
As we know, A = P [(1 + 𝑖)𝑛 ]
⟹ A = 5120 [(1 + 0.125)3 ]
⟹ A = 5120(1.4238)
∴ A = ₹ 7,290

Q.18) ₹4,000 is invested at an annual rate of interest of 10%. What is the amount after two years if
compounding is done (i) Annually, (ii) Semi-annually, (iii) Quarterly, (iv) Monthly?
(a) ₹4840, ₹ 4862, ₹ 4874, ₹ 4881 (b) ₹ 4840, ₹ 4682, ₹ 4874, ₹ 4922
(c) ₹ 4840, ₹ 4862, ₹ 4784, ₹ 4922 (d) None of these
Sol. (a)
As we know, A = P [(1 + 𝑖)𝑛 ]
(i) Here n = 2 and i = 0.1
∴ A = 4,000 [(1 + 0.1)2 ] = ₹ 4,840
10
(ii) Here 𝑛 = 2 × 2 = 4 𝑎𝑛𝑑 𝑖 = 2 = 5%
∴ A = 4,000 [(1 + 0.05)4] = ₹ 4,862
10
(iii) Here 𝑛 = 4 × 2 = 8 𝑎𝑛𝑑 𝑖 = 4 = 2.5%
∴ A = 4,000 [(1 + 0.025)8 ] = ₹ 4,873.6 or ₹ 4874 (approx.)
10
(iv) Here 𝑛 = 12 × 2 = 24 𝑎𝑛𝑑 𝑖 = 12 = 0.833%
∴ A = 4,000 [(1 + 0.00833)24 ] = ₹ 4,881.16 or ₹ 4881 (approx.)

Q.19) A bank pays interest at the rate of 8% p.a. compounded half-yearly. Find how much should be
deposited in the bank at the beginning of the year in order to accumulate ₹ 12,000 for 3 years?
(a) ₹ 11,200 (b) ₹ 10,124 (c) ₹ 9,486.17 (d) ₹ 10,890
Sol. (c)
𝑟 𝑛
As we know, A = P (1 + 100)
8 2×3
⟹ 12000 = P (1 + 2×100)
26 6
⟹ 12000 = P (25)
⟹ 12000 = P(1.265)
∴ 𝐏 = ₹ 𝟗, 𝟒𝟖𝟔. 𝟏𝟕

Q.20) A sum is being lent out at 20% p.a. compound interest. What is the ratio of increase in the
amount of 4th year to 5th year?
(a) 4:5 (b) 5:4 (c) 5:6 (d) Can’t determined

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Sol. (c)
𝑟 4
𝑃(1+ )
Required Ratio = 100
𝑟 5
𝑃(1+ )
100
1 100 100
= 𝑟 = = = 𝟓∶ 𝟔 … [ Given. r = 20%
(1+ ) 100+r 120
100

Q.21) In the compound interest, if the amount is 9 times its principal in two years, then the rate of
interest is?

(a) 300% p.a. (b) 200% p.a. (`c) 150% p.a. (d) 100% p.a.
Sol. (b)
Given. t = 2 years and A = 9p
𝑟 𝑡
We know, A = P (1 + 100)
𝑟 2
∴ 9𝑃 = 𝑃 (1 + )
100
𝑟 2
⟹ 9 = (1 + )
100
𝑟 2 𝑟
⟹ 32 = (1 + ) ⇒3=1+
𝑟
100 100
⇒ 2 = 100 ∴ 𝒓 = 𝟐𝟎𝟎% p.a.

2
Q.22) Udit purchased a Maruti Van for ₹ 1,96,000, and the rate of depreciation was 14 % per
7
annum. Find the value of the van after two years.
(a) ₹ 1,44,000 (b) ₹ 1,40,000 (c) ₹ 1,50,000 (d) ₹ 1,60,000
Sol. (a)
100
Given. Cost of Van = ₹ 1,96,000, Time = 2 years and Rate of depreciation = %
7
100 2
1 2
Amount = 1,96,000 (1 − 7
) ⟹ 1,96,000 (1 − )
100 7
6 2
⟹ 196000 × (7) = ₹ 1,44,000
∴ After 2 years its cost will be ₹ 1,44,000.

Q.23) A machine is depreciated at the rate of 20% on reducing balance. The original cost of the
machine was ₹ 1,00,000, and its ultimate scrap value was ₹ 30,000. The effective life of the
machine is:
(a) 4.5 years (approx.) (b) 5.4 years (approx.) (c) 5 years (approx.) (d) None of these
Sol. (b)
According to question, 30000 = 100000 (1 − 0.2)𝑛
⟹ 30,000 = 1,00,000(.8)𝑛
30,000
⟹ = (0.8)𝑛
1,00,000
⟹ 0.3 = (0.8)𝑛
⟹ 𝒏 = 5.4 years (approx.)

Q.24) The least number of complete years in which a sum of money put at 20% CI will be more than
doubled is:
(a) 4 years (b) 5 years (c) 6 years (d) 8 years
Sol. (a)
20 𝑛
According to question, P (1 + 100) > 2P
6 𝑛
⟹ ( ) >2
5

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6 6 6 6
⟹ × × × >2
5 5 5 5
∴ 𝒏 = 𝟒 years

Q.25) If a principal P becomes Q in 2 years when interest R% is compounded half-yearly. And if the
same principal P becomes Q in 2 years when interest S% has compounded annually, then
which of the following is true?
(a) R > S (b) R = S (c) R < S (d) R ≤ S
Sol. (c)
Since interest is compounded half-yearly at R% p.a., the value of R will be lesser than the value
of S. i.e., R < S.

Q.26) The difference between C.I. and S.I. on a certain sum of money invested for 3 years at 6% p.a. is
₹110.16. The principle is:
(a) ₹ 3,000 (b) ₹ 3,700 (c) ₹ 12,000 (d) ₹ 10,000
Sol. (d)
Given. 𝐶. 𝐼 − 𝑆. 𝐼 = ₹ 110.16 = D (Let)
𝐷 × (100)3
⟹P =
𝑟 2 × (𝑟 + 300)
110.16×(100)3
∴P = = ₹ 𝟏𝟎, 𝟎𝟎𝟎
36×(306)

Q.27) A man gets a simple interest of ₹ 1000 on a certain principal at the rate of 5% in 4 years. What
compound interest will the man get on twice the principal in 2 years at the same rate?
(a) ₹1,000 (b) ₹1,005 (c) ₹1,012 (d) ₹1,025
Sol. (d)
Given. R = 5% 𝑎𝑛𝑑 𝑡 = 4 years
𝑃𝑅𝑇
We have, S. I. = 100
P×5×4
⟹ 1000 =
100
∴ P = 5000
Twice of Principal = 2×₹5000 = ₹ 10,000
5 2
Amount = ₹10000 (1 + ) = ₹ 11,025
100
∴ C.I. = 11,025 – 10,000 = ₹ 1,025

Q.28) A person invested some amount at the rate of 6% simple interest per annum and received ₹
900 as an interest after 3 years. If interest is compounded every year, then how many rupees
more did he receive on the same amount at the same rate of interest for the same time?
(a) ₹ 38.13 (b) ₹ 25.33 (c) ₹ 55.08 (d) ₹ 35.30
Sol. (c)
Let Principal amount be P.
𝑃𝑅𝑇
We know, S. I. = 100
P×6×3
⟹ 900 = 100
⟹ P = ₹ 5,000
Amount = 5000(1 + 0.06)3 = ₹ 5,955.08
C.I. = 5955.08 – 5000 = ₹ 955.08
∴ Required difference = CI – SI = 955.80 − 900 = ₹ 55.08

Q.29) Manav borrowed a certain amount from the bank for 4 years. The bank charges 20% S.I. for
the first two years and 15% p.a. C.I. for the last 2 years. If the interest amount given by Manav
to the bank is ₹ 2970 less than the borrowed amount, then what is the total amount given by
Manav to the bank?
(a) ₹ 28,090 (b) ₹ 37,030 (c) ₹ 41,070 (d) ₹ 32,050

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Sol. (b)
Let borrowed amount be 100 𝑥.
Total amount at the end of 2 years = 100𝑥 +(100𝑥 × 20 × 2)/100 = 140𝑥
15 2
Total amount at the end of 4 years = 140𝑥 (1 + ) = 185.15𝑥
100
According to question,
⟹ 185.15𝑥 − 100𝑥 = 100𝑥 − 2970
⟹ 100𝑥 − 85.15𝑥 = 2970
⟹ 14.85𝑥 = 2970
⟹ 𝑥 = 200
Total amount borrowed = 100𝑥 = ₹ 20,000
Total interest amount = 20000 – 2970 = ₹17,030
∴ Total amount given by Manav to bank = 20,000 + 17,030 = ₹ 37,030

Q.30) A sum of money is accumulating at compound interest at a certain rate of Interest. If simple
interest instead of the compound were reckoned, the interest for the first two years would be
diminished by ₹ 20 and that for the first three years by ₹ 61. Find the sum.
(a) ₹ 6,000 (b) ₹ 8,000 (c) ₹ 7,500 (d) ₹ 6,500

Sol. (b)
Difference between C.I. and S.I. for 2 years = 20
𝑃𝑅2
We know, 1002 = 20 … (i)
Difference between C.I. and S.I. for 3 years = 61
PR2 300+R
⟹ [ ] = 61 … (ii)
1002 100
Equation (ii) divided by equation (i),
PR2 300 + R
2 [ 100 ] 61
⟹ 100 =
PR2 20
1002
300 + R 61
⟹ =
100 20
61
⟹ 300 + R = ( ) × 100
20
⟹ R = 305 − 300 = 5%
1002
From (i), P = 20 × 2 ∴ P = ₹ 8,000
5
Q.31) Vikas invested the sum of money in two schemes, A and B, offering compound interest at 8%
and 9% per annum, respectively. If the total amount of interest accrued through two schemes
together in two years was ₹ 4818.30 and the total amount invested was ₹ 27,000, what was
the amount invested in Scheme A?
(a) ₹ 12,000 (b) ₹ 13,500 (c) ₹ 15,000 (d) None of these
Sol. (a)
Let the amount invested in scheme A be 𝑥, and in the scheme, B be (27000 – 𝑥).
According to Question,
8 2 9 2
⟹ 4818.30 = [𝑥 {(1 + 100) − 1}] + [(27000 − 𝑥) {(1 + 100) − 1}]
2 2 109 2
⟹ 4818.30 = [𝑥 {(1 + ) − 1}] + [(27000 − 𝑥){(100) − 1}]
25
27 2 109 2
⟹ 4818.30 = [𝑥 {( ) − 1}] + [(27000 − 𝑥) {( ) − 1}]
25 100
729 11881
⟹ 4818.30 = [𝑥 { − 1}] + [(27000 − 𝑥) { − 1}]
625 10000
481830 104 1881(27000 − 𝑥)
⟹ = (𝑥 × )+
100 625 10000
481830 1664𝑥 + 50787000 − 1881𝑥
⟹ =
100 10000

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⟹ 48183000 = 1664𝑥 + 50787000 − 1881𝑥

⟹ 217𝑥 = 2604000
∴ 𝑥 = ₹ 12,000

Q.32) Kavita borrowed ₹ 10,815, which is to be paid back in 3 equal half-yearly instalments. If the
40
interest is compounded half-yearly at 3 % per annum, how much is each instalment?
(a) ₹ 2,048 (b) ₹ 3,150 (c) ₹ 4,096 (d) ₹ 5,052
Sol. (c)
40/3 20
Rate of interest = 2 % = 3 % = 0.0667 half-yearly
1 − (1 + 𝑖)−𝑛
As we know, P. V. = R ( )
𝑖
1 − (1 + 0.0667)−3
⟹ 10815 = R ( )
0.0667
⟹ 10815 = R(2.6402)
10815
∴ 𝐑 = 2.6402 = ₹ 𝟒𝟎𝟗𝟔 (approx.)

Q.33) A sum of money is put at compound interest for 2 years at 20% p.a. It would earn ₹ 482 more
if the interest were payable half-yearly than it was payable yearly; then the sum is
(a) ₹ 20,000 (b) ₹ 25,000 (c) ₹ 26,000 (d) None of these
Sol. (a)
C.I. if calculated annually:
20 2 36 11P
C1 = P [(1 + ) − 1] ⟹ P [ − 1] =
100 25 25
C.I. if calculated semi-annually:
10 4 4641P
C2 = P [(1 + ) − 1] =
100 10000
4641P 11P
Now, C2 − C1 = − = 482
10000 25
241P
⟹ = 482
10000
∴ P = ₹ 20,000

Q.34) Neeraj bought a car and paid ₹ 12,000 as a down payment. He told the seller that he would pay
1
₹13,050 after 1 year and ₹ 22,680 after two years at 12 2 % compound interest per annum. At
what amount did he purchase the car?
(a) ₹ 42,000 (b) ₹ 40,000 (c) ₹ 41,520 (d) ₹ 42,510
Sol. (c)
Given. Down payment = ₹ 12000
Principal for the first instalment to be P1 .
25
∴ 13050 = P1 (1 + 2×100)
⟹ P1 = ₹ 11600
Principal for the second instalment to be P2 .
25 2
∴ 22680 = P2 (1 + 2×100)
⟹ P2 = ₹ 17920
∴ Purchase value of car = 12000 + 11600 + 17920 = ₹ 41,520

Q.35) The annual birth and death rates per 1,000 are 39.4 and 19.4, respectively. The number of
years in which the population will be doubled assuming there is no immigration or emigrations:
(a) 35 years. (b) 30 years. (c) 25 years. (d) None of these
Sol. (a)
Annual increment in the population = (39.4 − 19.4) = 20 per thousand = 2%
Let the initial population = 100 and the number of years be n.

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Final population = 200

∴ A = P (1 + 𝑖)𝑛
2 𝑛
⟹ 2 × 100 = 100 (1 + 100)
⟹ 2 = (1.02)𝑛
⟹ 𝒏 = 𝟑𝟓 𝒚𝒆𝒂𝒓𝒔

Q.36) Rishabh borrowed a certain sum from Anita at a certain rate of 10% simple interest for 2
years. He lent this sum to Sunil at the rate 50% more than the rate on which simple interest
was accrued. Find the C.I. for 2 years Compounded annually at the new rate of interest if
Rishabh paid ₹ 8000 as an interest to Anita?
(a) ₹ 12,900 (b) ₹ 11,000 (c) ₹ 13,900 (d) ₹ 14,000
Sol. (a)
Given. S.I. = ₹ 8000
𝑃×10×2
⟹ 100 = 8000
⟹ P = ₹ 40,000
New rate 50% more than 10% = 150/100× 10 = 15%
15 2
⟹ C. I. = 40000 × [(1 + 100) − 1]
23 2
⟹ C. I. = 40000 × [( ) − 1]
20
∴ C.I. = ₹ 12,900

Q.37) Kavita has ₹ 48000 with her, a part of which she invested in a scheme for 3 years at 20% p.a.
C.I., and from remaining, he purchased a laptop whose value decreases by 10% every year. At
the end of 3 years, the price of the laptop will be ₹ 5508 more than the total amount received
from the scheme, then at what price the laptop is purchased?
(a) ₹ 40,000 (b) ₹ 48,000 (c) ₹ 32,000 (d) ₹ 36,000
Sol. (d)
Let the amount invested in the scheme and price of the laptop be 𝑥 and (48000 – 𝑥) respectively.
Amount received after three years from scheme =P(𝑙 + 𝑖)𝑛 = 𝑥 × 1.23 = 1.728𝑥
Price of the laptop after 3 years = (48000 − 𝑥) × 0.93 = (34992 − 0.729𝑥)
According to question,
⟹ 34992 – 0.729𝑥 – 1.728𝑥 = 5508
⟹ 𝑥 = ₹ 12000
∴ Price at which laptop is purchased = ₹48000 – ₹12000 = ₹ 𝟑𝟔, 𝟎𝟎𝟎

Q.38) Ankit and Anjali have equal amounts. Ankit invested all his amounts at 10% p.a. compounded
annually for 2 years, and Anjali invested 1/4th amount at 10% p.a. compound interest annually
and rested at r% per annum at simple interest for the same 2 years period. The amount
received by both at the end of 2 years is the same. What is the value of r?
(a) 14% p.a. (b) 12.50% p.a. (c) 10.50% p.a. (d) 11% p.a.
Sol. (c)
Let the amount of Ankit and Anjali each has ₹ 100.
Compound amount of Ankit’s investment
10 2
⟹ 100 (1 + 100) = 121
Compound amount of Anjali’s investment of 1/4th of the amount, i.e., 100/4 = 25
10 2
⟹ 25 (1 + ) = 30.25
100
Simple interest of Anjali’s rest of the amount, i.e., 75
75×𝑟×2
⟹ S. I. = = 1.5𝑟
100
The amount received by both at the end of 2 years is the same
⟹ 121 = 30.25 + 75 + 1.5𝑟
∴ 𝒓 = 𝟏𝟎. 𝟓% p.a.

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Q.39) ₹ 2,60,200 is divided between Ram and Shyam so that the amount that Ram receives in 4
years is the same as that Shyam receives in 6 years. If the interest is compounded annually at
the rate of 4% per annum, then Ram’s share is:
(a) ₹ 1,25,000 (b) ₹ 1,35,200 (c) ₹ 1,52,000 (d) ₹ 1,08,200
Sol. (b)
Let Ram’s share be ₹ 𝑥, and Shyam share is ₹ (2,60,200 – 𝑥).
According to the question,
4 4
⟹ 𝑥 [1 + (100)] 4 = (260200 − 𝑥) [1 + (100)] 6
4
⟹ 𝑥 = (260200 − 𝑥) [1 + (100)] 2
676
⟹ 𝑥 = (260200 − 𝑥) 625
625𝑥
⟹ = 260200 − 𝑥
676
625𝑥
⟹ + 𝑥 = 260200
676
⟹ 1301𝑥 = 260200 × 676
⟹ 𝑥 = ₹ 1,35,200
∴ Ram’s share is ₹ 1,35,200.

Q.40) The effective rate of interest corresponding a nominal rate of 7% p.a. convertible quarterly is:
(a) 7% p.a. (b) 7.5% p.a. (c) 5% p.a. (d) 7.18% p.a.
Sol. (c)
𝑖 1×4
As we know, E = (1 + 4) −1
0.07 4 7
⟹ (1 + ) − 1 = (1.0175)4 − 1 … [∵ 𝑖 = 7% 𝑝. 𝑎. or % quartely
4 4
= 0.07185903 or 𝟕. 𝟏𝟖% 𝐩. 𝐚.(approx.)

Q.41) Yash lent ₹ 12000 on a condition such that the rate of compound interest per annum is 5% for
the first year, 6% for the next two years and 10% for the next three years. How much compound
interest he will get at the end of the time period?
(a) ₹ 6,843.35 (b) ₹ 6,843.20 (c) ₹ 6,483.75 (d) ₹ 6,843.45
Sol. (d)
Given. P = ₹ 12000
5 6 2 10 3
Amount (A) = 12000 (1 + 100) (1 + 100) (1 + 100)
21 53 2 11 3
= 12000 (20) (50) (10) = ₹ 18,843.45
∴ C.I. = 18,843.44 – 12000 = ₹ 6,843.45

Q.42) A company establishes a sinking fund to provide for the payment of ₹ 2,00,000 debt maturing
in 20 years. Contributions to the fund are to be made at the end of every year. Find the amount
of each annual deposit if interest is 5% per annum.
(a) ₹ 6142 (b) ₹ 6048 (c) ₹ 6052 (d) ₹ 6152
Sol. (b)
(1+𝑖)𝑛 −1
We know, A = R [ 𝑖 ]
R 5
⟹ 200000 = [(1.05)20 − 1] … [∵ 𝑖 = or 0.05 and 𝑛 = 20
0.05 100
⟹ 10,000 = 𝑅(1.6533)
10000
∴ 𝑹 = 1.6533 = ₹ 𝟔𝟎𝟒𝟗 (approx.)

Q.43) If A = ₹ 100, 𝑛 = 10, 𝑟 = 5% 𝑝. 𝑎. Find the F.V. of annuity. Using the formula
𝐴
F.V.= 𝑖{(1+𝑖)𝑛 −1}−1 . FV is equal to:
(a) ₹ 1,258 (b) ₹ 2,581 (c) ₹ 1,528 (d) None of these

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Sol. (a)
A A [(1+𝑖)𝑛 −1]
Given. F. V. = 𝑖 {(1+𝑖)𝑛 −1}−1 … [∵ FV = 𝑖
]
100
=
0.05 {(1.05)10 − 1}−1
100 × 20
=
(0.629)−1
= 2000 × 0.629
= ₹1,258 (approx.)

Q. 44) If the amount of an annuity after 25 years at 5% p.a. CI is ₹ 50,000 the annuity will be
(a) ₹ 1,406.90 (b) ₹ 1,047.62 (c) ₹1,146.90 (d) None of these
(1+𝑖)𝑛 −1
Sol. (b) We know, F. V. = R [ 𝑖 ]
(1.05)25 − 1
⟹ 50,000 = R [ ]
0.05
⟹ 50,000 = R (47.727)
⟹ 𝑹 = ₹ 𝟏𝟎𝟒𝟕. 𝟔𝟑 (approx.)

Q.45) The cost of a T.V. is ₹ 12,000. A customer bought it after paying ₹ 4,000 as a down payment,
and he promises to pay the rest amount in three equal instalments at 5% compound interest
per annum. Find the amount of each instalment paid by him?
(a) ₹ 2,973.66 (b) ₹ 2,937.66 (c) ₹ 2,983.33 (d) ₹ 2,837.33
Sol. (b)
Amount on which instalment has to be paid = ₹ 12,000 − ₹ 4,000 = ₹ 8,000
1 − (1 + 0.05)−3
∴ 8000 = R [ ]
0.05
⟹ 8000 = R[2.7232]
8000
∴𝐑= = ₹ 𝟐𝟗𝟑𝟕. 𝟕𝟐
2.7232
Q.46) A loan of ₹ 10,000 is to be paid back in 30 equal instalments. The amount of each instalment to
cover the principal and at 4% p.a. CI is:
(a) ₹ 587.87 (b) ₹ 587 (c) ₹ 578.30 (d) None of these
Sol. (c)
1−(1+𝑖)−𝑛
We know that, P. V. = R ( )
𝑖
−30
1 − (1 + 0.04)
⟹ 10000 = R ( )
0.04
⟹10,000 = R(17.292)
∴ 𝐑 = ₹ 578.30
Q. 47) Suppose your mom decides to gift you ₹ 10, 000 every year starting from today for the next
five years. You deposit this amount in a bank as and when you receive and get 10% p.a. interest
rate compound annually. What is the present value of this annuity?
(a) ₹ 41,698.70 (b) ₹ 41,958.70 (c) ₹ 54,000 (d) None of these
Sol. (a)
Given. 𝑅 = ₹ 10,000, 𝑛 = 5 and 𝑖 = 0.10 (Annuity due)
1−(1+𝑖)−(𝑛−1)
Present Value = 𝑅 [ ]+𝑅
𝑖
−4
1 − (1 + 0.1)
= 10000 [ ] + 10000
0.1
∴ Present value = 31,698.70 + 10,000 = ₹ 41,698.70

Q.48) LIC of India offers a 7 years annuity with a guaranteed rate of 6.35% compounded annually.
How much will a person receive payment over the 7 years period, if he pays as annuities of
₹10,000 annually?
(a) ₹ 55,135.98 (b) ₹ 90,226.70 (c) ₹ 59,000 (d) None of these

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Sol. (b)
Given. R = ₹ 10000, 𝑖 = 0.0635 and t = 7 years
(1+𝑖)𝑛 −1
We know that, F. V. = 𝑅 [ ] (1 + 𝑖)
𝑖
7
10000[(1 + 0.0635) − 1](1 + 0.0635)
=
0.0635
10635[(1 + 0.0635)7 − 1]
=
0.0635
= 10635[8.483939]
∴ F.V. = ₹ 90,226.70
Q. 49) Z invests ₹ 10,000 every year starting from today for the next 10 years. Suppose the interest
rate is 8% p.a. compound annually. Calculate the future value of the annuity.
(a) ₹ 1,55,135.98 (b) ₹ 1,56,454.8 (c) ₹ 1,59,000 (d) None of these
Sol. (b)
Given. R = ₹ 10,000, 𝑖 = 0.08 and t = 10 years
(1 + 𝑖)𝑛 − 1
⟹ F. V. = R [ ] (1 + 𝑖)
𝑖
10000[(1 + 0.08)10 − 1](1 + 0.08)
=
0.08
10800[(1 + 0.08)10 − 1]
=
0.08
= 10800[14.48656]
∴ F.V. = ₹ 1,56,454.875

Q.50) A person invests ₹ 500 at the end of each year with a bank which pays interest at 10% p.
a C.I. annually. The amount standing to his credit one year after he has made his yearly
investment for the 12th time is:
(a) ₹ 11,761.36 (b) ₹ 10,000 (c) ₹ 12,000 (d) None of these
Sol. (a)
Given. R = ₹ 500, 𝑟 = 10% and 𝑖 = 0.1
(1+𝑖)𝑛 −1
As we know, F. V. = R ( 𝑖 )
(1.1)12 − 1
F. V. = 500 ( )
0.1
= 500(21.3843) = ₹ 10,692.14
∴ Amount after 1 year after 12th instalment = ₹10,692.14 + ₹1069.22 = ₹ 𝟏𝟏, 𝟕𝟔𝟏. 𝟑𝟔

Q.51) Ramesh wants to retire and receive ₹ 3,000 a month. He wants to pass this monthly payment
to future generations after his death. He can earn an interest of 8% compounded annually. How
much will he need to set aside to achieve his perpetuity goal?
(a) ₹4,44,775 (b) ₹4,49,775 (c) ₹5,49,775 (d) ₹2, 44,977
Sol. (b)
0.08
Given. R = ₹ 3000 𝑎𝑛𝑑 𝑖 = 12 or 0.00667
𝑅 3000
P. V. = = = ₹ 𝟒, 𝟒𝟗, 𝟕𝟕𝟓
𝑖 0.00667

Q.52) Megha deposits ₹ 2000 annually into Retirement Pension Plan that earns 6.85% compounded
annually. Due to a change in employment, these deposits stop after 10 years, but the account
continues to earn interest until Megha retires 25 years after the last deposit is made. How
much is in the account when Megha Retires?
(a) ₹ 1,40,000.02 (b) ₹ 1,43,785.10 (c) ₹ 1,32,000.05 (d) None of these
Sol. (b)
Given. R = ₹ 2,000, 𝑖 = 0.0685 and 𝑡 = 10
2000[(1 + 0.0685)10 − 1]
Now, Future value =
0.0685

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= 2000[13.7189]
= ₹ 27,437.89
Now, the amount ₹ 27,437.89 earns interest for 25 years compounded annually.
∴ 𝐀 = 27437.89(1 + 0.0685)25 = ₹ 𝟏, 𝟒𝟑, 𝟕𝟖𝟓. 𝟏𝟎

Q.53) A man purchased a house valued at ₹ 3,00,000. He paid ₹ 2,00,000 at the time of purchase and
agreed to pay the balance with interest at 12% per annum compounded half-yearly in 20
equal half-yearly instalments. If the first instalment is paid after six months from the date of
purchase, then the amount of each instalment is;
(a) ₹ 8,718.40 (b) ₹ 8,769.21 (c) ₹ 7,893.13 (d) None of these
Sol. (a)
Here, Balance amount (V) = (3,00,000 − 2,00,000) = ₹ 1,00,000
12
Given. 𝑖 = % = 0.06 and 𝑛 = 20
2
1 − (1 + 𝑖)−𝑛
∴ P. V. = R ( )
𝑖
1 − (1 + 0.06)−20
= 1,00,000 = R ( )
0.06
⟹1,00,000 = R (11.16)
⟹ R = ₹ 8960.57 (approx.)

Q.54) Due to some medical problems, Vinod takes premature retirement and gets ₹9,900 quarterly.
He wants to pass this quarterly payment to future generations after his death. He can earn an
interest of 7.2% compounded annually. How much will he need to set aside to achieve his
perpetuity goal?
(a) ₹ 3,50,000 (b) ₹ 4,50,000 (c) ₹ 5,50,000 (d) None of these
Sol. (c)
7.2 0.072
Given. 𝑖 = = 0.072 p. a. and quarterly
100 4
𝑅
We know that, P. V. =
𝑖
9900 4
⟹ P. V. = = 9900 ×
0.072 0.072
4
∴ P.V. = ₹ 5,50,000

Q. 55) Raja, aged 40 wishes his wife Rani to have ₹ 40 lakhs at his death. If his expectation of life is
another 30 years and he starts making equal annual investments commencing now at 3%
compound interest p.a., How much should he invest annually?
(a) ₹ 84,448 (b) ₹ 84,450 (c) ₹ 84,449 (d) ₹ 81,632.65
Sol. (d)
(1+𝑖)𝑛 −1
We know, F. V = R [ 𝑖
] (1 + 𝑖)
30
(1.03) − 1
⟹ 4000000 = R [ ] (1.03)
0.03
⟹ 40,00,000 = R(49)
⟹ ₹ 𝟖𝟏, 𝟔𝟑𝟐. 𝟔𝟓 (approx.)

Q.56) A sinking fund is created for redeeming debentures worth ₹ 5 lakhs at the end of 25 years.
How much provision needs to be made out of profits each year provided sinking fund
investments can earn interest at 4% p.a.?
(a) ₹ 12,001 (b) ₹ 12,000 (c) ₹ 12,006 (d) None of these
Sol. (c)
(1+𝑖)𝑛 −1
We know, F. V. = R [ 𝑖 ]
(1 + 0.04)25 − 1
⟹ 500000 = R [ ]
0.04

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⟹ 500000 = R[41.646]
⟹ R = ₹ 12,006 (approx.)

Q.57) A man decides to retire at the age of 50 years, and his employer gives him a pension of ₹
20,000 per year for the rest of his life. Reckoning his expectation of life to be 12 years and that
interest is at 4% per annum, what single sum is equivalent to his pension?
(a) ₹1,87,701 (b) ₹ 1,25,000 (c) ₹ 1,26,000 (d) none of these
Sol. (a)
Given, R = ₹ 20,000, n = 12 and 𝑖 = 0.04
1−(1+𝑖)−𝑛
We know that, Present Value = R [ 𝑖
]
−12
1 − (1 + 0.04)
⟹ 20000 [ ]
0.04
Present value = 20000[9.3851]
∴ Present value = ₹ 1,87,701 (approx.)

Q. 58) How much amount is required to be invested every year so as to accumulated ₹ 3,00,000 at
the end of 10 years if interest is compounded annually at 10%?
(a) ₹ 20,214 (b) ₹ 20,140.17 (c) ₹ 18,823.60 (d) ₹ 20,214.61
Sol. (c)
Given. A = ₹ 3,00,000, 𝑛 = 10 and 𝑖 = 0.1
(1+𝑖)𝑛 +1
As we know, Future Value = R [ 𝑖 ]
(1 + 0.10)10 − 1
⟹ 300,000 = R [ ]
0.1
= 300,000 = R[15.9374]
∴ R= ₹18,823.65

Q.59) The annual sales of a company in the year 2015 was ₹1000, and in the year 2020 was ₹ 2490.
Find the compounded annual growth of sales in the given period of the same company.
(a) 14.289% p.a. (b) 10% p.a. (c) 15% p.a. (d) 20% p.a.
Sol. (d)
Given. 𝑡𝑛 = 2020 and 𝑡0 = 2015
𝑉(𝑡𝑛 ) = 2490 and V(𝑡0 ) = 1000
1
2490 2020−2015
According to Question, [(1000) − 1] × 100
1
⟹ [(2.49) − 1] × 100
5

⟹ (1.200 − 1) × 100 = 𝟐𝟎% 𝒑. 𝒂.

Q. 60) Appu retired at 60 years, receiving a pension of ₹ 14,400 a year paid in half-yearly
instalments for the rest of his life after reckoning his life expected to be 13 years and that
interest at 4% p.a. is payable half-yearly. What single sum is equivalent to his pension?
(a) ₹ 1,45,000 (b) ₹ 1,44,871 (c) ₹ 1,44,800 (d) ₹ 1,44,700
Sol. (b)
1−(1+𝑖)−𝑛 4
As we know, PV = R ( ) [∵ 𝑛 = 13 × 2 = 26 𝑎𝑛𝑑 𝑖 = % = 0.02 ]
𝑖 2
14400
Where R = 2
= ₹ 7200
1−(1.02)−26
∴ PV = 7,200 ( 0.02 ) = ₹1,44,871 (approx.)
Q.61) A merchant buys a house and a car for ₹125000 and ₹180000, respectively. If the value of the
house increased at the rate of 20% per annum and the value of the car depreciated at the rate of
10% per annum that what is his profit or loss after two years?
(a) ₹ 20,600 (b) ₹ 20,800 (c) ₹ 20,500 (d) ₹ 20,700

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Sol. (b)
20 2 10 2
Total Amount = 125000 (1 + 100) + 180000 (1 − 100)
Total Amount = ₹ 3,25,800
Initial price of house and Car = 1,25,000 + 1,80,000 = ₹ 3,05,000
∴ Profit = 325800 – 305000 = ₹ 20,800

Q.62) A company may obtain a machine either by leasing it for 5 years (useful life) at an annual rent
of ₹ 2,000 or by purchasing it for ₹ 8,100. If the company can borrow money at 10% p.a., which
alternative is preferable?
(a) Leasing is preferable (b) Leasing is not preferable (c) Cannot say (d) None
Sol. (a)
Present value of P (rest) of the annuity.
1 − (1 + 𝑖)−𝑛
⟹ P = A[ ]
𝑖
1 − (1 + 0.1)−5
⟹ 2000 [ ]
0.10
⟹ P = 20000[1 − (1.1)−5 ]
⟹ P = ₹ 7,586 which is less than the Purchase Price.
∴ Leasing is preferable.

Q. 63) Mr Paul borrows ₹20,000 on condition to repay it with CI at 5% p.a. in annual instalments of
₹2,000 each. The number of years for the debt to be paid off is
(a) 10 years (b) 12 years (c) 11 years (d) 14.2 years
Sol. (d)
1 − (1 + 𝑖)−𝑛
As we know, PV = R ( )
𝑖
1 − (1 + 0.05)−𝑛
⟹ 20,000 = 2000 ( )
0.05
⟹ 10× 0.05 = 1 − (1.05)−𝑛
⟹ 0.5 = (1.05)−𝑛
1
⟹ 0.5 = (1.05)𝑛 ⟹ (1.05)𝑛 = 2 ⟹ 𝑛 = 𝟏𝟒. 𝟐 years

Q. 64) An investor intends to purchase a three-year ₹ 1,000 par value bond having a nominal
interest rate of 10%. At what price the bond may be purchased now if it matures at par and the
investor requires a rate of return of 14%?
(a) ₹ 674 (b) ₹ 906 (c) ₹ 1764 (d) ₹ 1645
Sol. (b)
Step 1:
Find the interest receivable = Face value × Nominal rate of interest = ₹1000 × 10% = ₹ 100
Step 2:
Find present value of interest receivable
1 − (1 + 𝑖)−𝑛
= 𝑅[ ]
𝑖
1−(1+0.14)−3
= 100 [ ] = ₹ 232
0.14
Step 3:
Find present value of redemption (Since, repayment of Loan one time it is not on Annuity)
As we know, A = P(1 + 𝑟)𝑛
⇒ 1000 = P(1 + 0.14)3
1000 1000
⇒ P = (1+0.14)3 = 1.481522 = ₹ 674
Step 4: Sum of step 2 and step 3
∴ Purchased price of bond = 232 + 674 = ₹ 906

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Q. 65) Compute the net present value for a project with a net investment of ₹ 1,00,000 and net cash flows
year one is ₹ 55,000; for year two is ₹ 80,000 and for year three is ₹ 15,000. Further, the
company’s cost of capital is 10%
(a) ₹14, 674 (b) ₹15,764 (c) ₹27,340 (d) ₹20,1645
Sol. (c)
Year Net cash Flows (₹) PVIF @ 10% Discounted cash flows (₹)
0 (1,00,000) 1.000 (1,00,000)
1 55,000 0.909 49,995
2 80,000 0.826 66,080
3 15,000 0.751 11,265
Net present value 27,340
Since the net present value of the project is positive, the company should accept the project.

Q.66) If the amount in 2.25 times of the sum after 2 years at compound interest (compounded
annually), the rate of interest per annum is:
(a) 25% p.a. (b) 30% p.a. (c) 45% p.a. (d) 50% p.a.
Sol. (d)
Given. Amount = 2.25P and t = 2 years
𝑅 2
∴ 2.25P = P (1 + )
100
𝑅 2
⟹ (1.5)2 = (1 + )
100
R
⟹ 1.5 = 1 +
100
∴ Rate of interest = 50% p.a.

Q.67) At compound interest, if a certain sum of money doubles in 𝑛 years, then the amount will be
four times in:
(a) 𝑛2 years (b) 2𝑛2 years (c) 2𝑛 years (d) 4𝑛 years
Sol. (c)
Since, A = 2P, then
⟹ 2𝑃 = 𝑃(1 + 𝑖)𝑛
⟹ 2 = (1 + 𝑖)𝑛
Squaring both sides,
⟹ 4 = (2)2 = [(1 + 𝑖)𝑛 ]2 = (1 + 𝑖)2𝑛
∴ Time period = 𝟐𝒏 𝒚𝒆𝒂𝒓𝒔

Q.68) A company establishes a sinking fund to provide for the payment ₹2,00,000 debt maturity in
20 years contribution to the fund are to be made at the end of every year. Find amount of each
deposit of interest is 10% per annum?
(a) ₹3,592.11 (b) ₹3,492.11 (c) ₹3,392.11 (d) None
Sol. (b)
10
Given. A(n, i) = 2,00,000, N = 20 years, R = 10%, i = 100 = 0.1
𝐴
Now, A(n, i) = [(1 + 0.1)20 – 1]
𝑖
𝐴
⟹ 200000 = 0.1 [(1 + 0.1)20 – 1] ⟹ 200000 × 0.1 = A [(1.1)20 – 1]

⟹ 20000 = A [6.7275–1] ⟹ 20000 = A × 5.7275

20000
⟹ A = 5.7275 ∴ A = 3492 (approx.)

Q.69) A machine worth ₹4,90,740 is depreciated at 15% on its opening value each year. When its
value would reduce to ₹2,00,750?
(a) 5 years 5 months (b) 5 years 6 months (c) 5 years 7 months (d) 5 years 8 months
Sol. (b)
Here, Original value (P) = ₹4,90,740

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Rate of depreciation (R) = 15%

Scrap value (A) = ₹2,00,750
Time (T) =?
Scrap value after ‘T’ years
𝑅 𝑇
A = P (1– 100)
15 𝑇
⟹ 2,00,750 = 4,90,740 (1– )
100
2,00,750
⟹ 4,90,740 = (0.85)𝑇
⟹0.4090 = (0.85)T
⟹ (0.85)5.5 = (0.85)T
We get, T = 5.5 years
∴ T = 5 years & 6 months

Q.70) A farmer borrowed ₹3,600 at the rate of 15% simple interest per Annum. At the end of 4
years, he cleared this account by paying ₹4,000 and a cow. The cost of the cow is:
(a) ₹1,000 (b) ₹1,200 (c) ₹1,550 (d) ₹1,760
Sol. (d)
Here, Principal (P) ₹3,600 R = 15%, T = 4 years
𝑃𝑅𝑇 3,600×15×4
We know, S.I. = 100 = 100
= 2,160
Amount (A) = P + S.I. = 3,600 + 2,160 = ₹5,760 but he paid ₹4,000 and a cow to clear his debt,
then
₹4,000 + the cost of cow = ₹5,760.
∴ The cost of cow = 5,760 – 4,000 = ₹1,760

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