Sample QuestionsFinancial Mathematics questions
One sample from each question group in this chapter. Select any group above to see the full set with answer keys.
If C is the original cost of an asset, S is the salvage value of the asset and $n$ is the number of year estimated for useful life of the asset, the annual depreciation of the asset is given by
- A
$D=\frac{C-S}{n}$
- B
$D=\frac{S-C}{n}$
- ✓
$D=\frac{C+S}{n}$
- D
$D=\frac{S}{C} \times n$
Answer: C.
View full solution →EMI depends on the following factors:
Answer: D.
View full solution →Reema has an initial investment of ₹ 1,00,000 in an investment plan. After 5 years, it has grown to $2,00,000$ then rate of return is:
- A
$50 \%$
- ✓
$100 \%$
- C
$75 \%$
- D
$200 \%$
Answer: B.
View full solution →A company buys a machine at a cost of ₹ 5000. The company decides on a salvage value of ₹ 1000 and a useful life of 5 years, then annual depreciation cost is:
Answer: D.
View full solution →Assume that Shyam holds a perpetual bond that generates an annual payment of ₹ 500 each year. He believes that the borrower is creditworthy and that an $8 \%$ interest rate will be suitable for this bond. The present value of this perpetuity is:
Answer: B.
View full solution →The decrease in monetary value of an asset over time due to use, wear and tear or obsolescence is called depreciation. The simplest and most commonly used method of computing depreciation is straight line or linear method of depreciation. In this method the depreciation amount is the same for every year over the useful life of the asset i.e., the depreciation amount charged until the asset gets reduced to zero, value or its salvage value at the end of its useful life. In linear depreciation method the annual depreciation of an asset is found by dividing the total depreciation by the number of year in its estimated useful life.
Q. 1. A mainframe computer whose cost is ₹ 5,00,000 will depreciate to a scrap value of ₹ 50,000 in 5 years. Using linear method of depreciation, find the book value of computer at the end of third year.
Q. 2. An asset costing ₹ $1,50,000$ is expected to have a useful life of 5 years and scrap value of ₹ 30,000 . Find the annual depreciation charge and the depreciation rate by using the linear depreciation method.
View full solution →Everyone needs money at every stage of their life. Sometimes it so happen that they have been desire to purchase their favourite stuff but they are incapable to purchase due to shortage of money. Loans are available for these purposes only. Loans are provided to people for such critical circumstances which many occur at any time. In order to fullfill the wish to purchase a new car, Anaya takes a loan of ₹ $5,00,000$ form a bank at an interest rate of $6 \%$ p.a. for 10 years. She wants to pay back the loan in equated monthly instalments.
Q. 1. Find the EMI by using flat rate method.
Q. 2. Find the EMI by reduce balance method. [Given $(1.005)^{-120}=0.54963$ ]
View full solution →₹ 5000 is invested in a Term Deposit Scheme that fetches interest $6 \%$ per annum compounded quarterly. What will be interest after one year ?
Given that $(1.015)^4=1.0613$
View full solution →Assume that the year-end revenues of a business over a three-year period, are mentioned in the following table:| Year-End | 31-12-2017 | 31-12-2020 |
| Year End Revenue | 9,000 | 13,000 |
Calculate the CAGR of the revenues over the three-years period spanning the "end" of 2017 to the "end" of 2020. Given that $\left(\frac{13}{9}\right)^{\frac{1}{3}}=1.13$. View full solution →Anna owns a produce truck, invested ₹ 700 in purchasing the truck, some other initial admin related and insurance expenses of ₹ 1500 to get the business going, and has now a day to day expense of ₹ 500 / p . m. Consider hypothetically that her everyday profit is ₹ 550 p.m. (ideally, it will be based on sales). At the end of 6 months, Anna takes up her accounts and calculates her rate of return.
A textile company has raised funds in the form of 5,000 zero-coupon bonds worth $₹ 1,100$ each. The company wants to set up a sinking fund for repayment of the bonds, which will be after 7 years. Determine the amount of the periodic contribution if the annualized rate of interest is $6 \%$, and the contribution will be done quarterly. [Given $(1.015)^{28}=1.5172$ ]
View full solution →A company XYZ borrowed ₹ 1.5 lakhs for reformation. The company plans to set up a sinking fund that will pay back the loan at the end of 3 years. Assuming a rate of $9 \%$ compounded quarterly, and the sinking fund of the ordinary annuity. Given that $(1.0225)^{12}=1.3060$.
View full solution →Riya invested ₹ 20,000 in a mutual fund in year 2016. The value of mutual fund increased to ₹ 32,000 in year 2021. Calculate the compound annual growth rate of her investment. [Given, $\log (1.6)=0.2041$, $\operatorname{antilog}(0.04082)=1.098]$
View full solution →Rohan purchased a laptop worth ₹ 80000 . He paid ₹ 20,000 as cash down and balance in equal monthly instalments in 2 years. If bank charges $9 \%$ p.a. compounded monthly. Calculate the EMI.
View full solution →A firm anticipates an expenditure of ₹ 50,0000 for plant modernization at end of 10 years from now. How much should the company deposit at the end of year into a sinking fund earning interest $5 \%$ per annum. [Given $\log 1.05=0.0212$, $\operatorname{antilog}(0.2120)=1.629]$
View full solution →(i) At what rate of interest will the present value of a perpetuity of ₹ 300 payable at the end of each quarter be ₹ 24000 ?
(ii) What sum of money invested now could establish a scholarship of ₹ 5000 which is to be awarded at the end of every year forever, if money is worth $8 \%$ per annum.
(iii) Rehaan invested ₹ 7000 in a Term Deposit Scheme that fetches interest $7.5 \%$ per annum compounded semi-annually. What will be the interest after 3 years? Given $(1.0375)^6=1.2472$
View full solution →A person amortizes a loan of ₹ 1500000 for renovation of his house by 8 years mortgage at the rate of $1 2 \%$ p.a. compounded monthly. Find
(i) the equated monthly instalment
(ii) the principal outstanding at the beginning of $40^{\text {th }}$ month.
(iii) the interest paid in $40^{\text {th }}$ payment. $\left[\right.$ Given $(1.01)^{96}=2.5993,(1.01)^{57}=1.7633$ ]
View full solution →A machine costing ₹ 200000 has effective life 7 years and its scrap value is ₹ 30000. What amount should the company put into a sinking fund earning $5 \%$ per annum, so that it can replace the machine after its useful life ? Assume that a new machine will cost ₹ 300000 after 7 years. [Given $\log (1.05)=0.0212$ and antilog $(0.1484)=$ 1.407]
View full solution →The cost of a TV depreciates by ₹ 800 during the second year and by ₹ 700 during the third year. Calculate:
(i) the rate of depreciation per annum.
(ii) the original cost of the machine.
(ii) the value of the TV at the end of third year.
Rohan has completed his MBA and now he wants to start a new business. So, he approaches to many banks. One bank is agreed to give loan to Rohan. So, Rohan has borrowed ₹ 5 lakhs from a bank on the interest rate of 12 per cent for 10 years.
Q. 1. EMI stands for:
(A) Equated Monthly Instalments
(B) Emerging Monthly Instalments
(C) Easy Monthly Instalments
(D) None of the above
Q. 2. To calculate monthly instalment, we use the following formula:
(A) Instalment Amount $=\frac{(1+i)^n}{(1+i)^n} \times(P \times i)$
(B) Instalment Amount $=\frac{(1+i)^n}{(1+i)^n-1} \times(P \times i)$
(C) Instalment Amount $=\frac{(1+i)^n}{(1+i)^{n-1}} \times(P \times i)$
(D) None of the above
Q. 3. Calculate monthly instalment using $( 1 . 0 1 )^{120}$ $=3.300$
(A) ₹ 7100
(B) ₹ 7174
(C) ₹ 7147
(D) ₹ 7200
Q. 4. Find the amount of total payment made by Rohan.
(A) ₹ $8,60,88$
(B) ₹ $8,80,880$
(C) ₹ $8,60,000$
(D) ₹ $8,60,880$
View full solution →View full solution →