CA Foundation P3 · Chapter 4 · Question 10 of 10
A loan of ₹1,00,000 is to be repaid in 3 equal annual instalments, the first payable one year after the loan, with interest at 10% per annum compounded annually. Each instalment (to the nearest paisa) is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) ₹40,211.48
Explanation
Instalment = P / [(1 − (1 + i)^(−n))/i]. (1.1)³ = 1.331, so (1.1)^(−3) = 0.751315 and the factor = 0.248685/0.1 = 2.486852. Instalment = 1,00,000/2.486852 = ₹40,211.48. ₹33,333.33 ignores interest, ₹43,333.33 adds one year's flat interest, and ₹36,555.89 treats the instalments as an annuity due.
More Mathematics of Finance MCQs
- Q2The compound interest on ₹20,000 for 1½ years at 10% per annum compounded half-yearly is:
- Q3The effective annual rate of interest corresponding to a nominal rate of 12% per annum compounded quarterly is (to two decimals):
- Q4The difference between compound interest and simple interest on ₹15,000 for 2 years at 6% per annum (compounded annually) is:
- Q5At what rate of simple interest per annum will a sum double itself in 8 years?
- Q6₹5,000 is deposited at the end of each year for 4 years at 10% per annum compounded annually. The amount at the end of 4 years is: