Financial MatheMatics
class 12
One Mark
1. What is the face value of a sinking fund that yields a dividend of ₹1800 at 10% semi-annually?
(a) ₹ 3600
(b) ₹18000
(c) ₹ 24000
(d) ₹ 36000
2. A newspaper printing machine costs ₹ 4,80,000 and estimated scrap value of ₹ 25,000 at the end of its
useful life of 10 years. What is its annual depreciation as per linear method?
(a) ₹ 4,550
(b) ₹ 45,500
(c) ₹ 50,500
(d) ₹ 61,500
3. For questions, two statements are given – one labelled Assertion(A) and the other labelled Reason (R).
Select the correct answer to these questions from the codes (i), (ii), (iii) and (iv) as given below:
(i) Both A and R are true and R is the correct explanation of the assertion
(ii) Both A and R are true but R is not the correct explanation of the assertion
(iii) A is true, but R is false
(iv) A is false, but R is true
Assertion (A): If the nominal rate of interest is 12.5% and the inflation is 2%, then the effective rate of
interest is 10.5%
Reason (R): If the interest is calculated only at the end of an year, then the effective rate of interest is
same as the nominal rate of interest.
(a) (i)
(b) (ii)
(c) (iii)
(d) (iv)
4. An investment of ₹ 10,000 becomes ₹ 60,000 in 4 years, then the CAGR (compound annual growth rate)
is given by
4
√6−1
(a) 100
4
√6 + 1
(𝑏)
100
𝟒
(c) [ √𝟔 − 𝟏]𝑿𝟏𝟎𝟎
4
(d) [ √6 + 1]𝑋100
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5. The effective rate of return which is equivalent to nominal rate of 8% p.a. compounded
quarterly is: [Given (1.02)4 = 10824]
(a) 8·16%
(b) 7·95%
(c) 8·24%
(d) 8·5%
6. The present value of a perpetuity of ₹ R payable at the end of each payment period, when the money is
worth i per period, is given by:
(a) Ri
R
(b) R + i
𝐑
(c) 𝐢
(d) R - Ri
7. The effective rate which is equivalent to nominal rate of 10% p.a. compounded quarterly is :
(a) 10·25%
(b) 10·38%
(c) 10·47%
(d) 10·53%
8. The effective rate of interest equivalent to the nominal rate 6% compounded semi-annually is
(a) 6.05%
(b) 6.07%
(c) 6.09%
(d) 6.1%
9. If the investment of ₹ 20000 in the mutual fund in 2015 increased to ₹ 32000 in year 2020, then CAGR
(Compound Annual Growth rate is) is [Given (1.6)1/5 = 1.098]
(a) 9.08%
(b) 9.8%
(c) 0.098
(d) 0.09
10. A machine costing ₹ 30,000 is expected to have a useful life of 4 years and a final scrap value of ₹
4000. The annual depreciation is
(a) ₹ 5500
(b) ₹ 6500
(c) ₹ 7500
(d) ₹ 8500
11. If the cash equivalent of a perpetuity of Rs 300 payable at the end of each quarter is 24000 then rate of
interest compounded quarterly is
(a) 5%
(b) 4%
(c) 3%
(d) 2%
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1
12. Using flat rate method, the EMI to repay a loan of ₹ 20,000 in 2 2 year at an interest rate 8% p.a. is:
(a) ₹ 700
(b) ₹ 800
(c) ₹ 900
(d) ₹ 100
13. A mobile phone costs ₹ 12,000 and its scrap value after a useful life of 3 years is ₹ 3,000. Then, the book
value of the mobile phone at the end of 2 years is:
(a) ₹ 3000
(b) ₹ 6000
(c) ₹ 5000
(d) ₹ 7000
14. What sum of money should be deposited at the end of every 6 months to accumulate ₹ 50,000 in 8 years,
if money is worth 6% p.a. compounded semi-annually? [Given: (1·03)16= 1·6047]
(a) ₹ 3,432·53
(b) ₹ 2,783·08
(c) ₹ 2,480·57
(d) ₹ 2,149·93
15. At what rate of interest will the present value of a perpetuity of ₹ 500 payable at the end of each quarter
be ₹ 40,000?
(a) 1.25% p.a.
(b) 2.5% p.a.
(c) 5% p.a.
(d) 6% p.a.
16. If nominal rate is r% compounded k times in a year, then the effective rate of interest re is given by :
𝑟 𝑘
(a) 𝑟𝑒 = (1 − 100𝑘) − 1
𝑟 𝑘
(b) 𝑟𝑒 = (1 + 100𝑘) + 1
𝑟 𝑘
(c) 𝑟𝑒 = (1 − 100𝑘) + 1
𝒓 𝒌
(d) 𝒓𝒆 = (𝟏 + 𝟏𝟎𝟎𝒌) − 𝟏
17. If the annual depreciation of an asset is ₹ 40,000 and its scrap value after useful life of 15 years is ₹
50,000, then the original cost of the asset is:
(a) ₹7,60,000
(b) ₹ 7,20,000
(c) ₹ 6,50,000
(d) ₹ 6,30,000
18. An investment’s starting value is ₹ 10,000 and it grows to ₹ 60,000 in 4 years. The CAGR is : (Given :
61/4 = 1.56508)
(a) 1.56%
(b) 5.65%
(c) 15.65%
(d) 56.50%
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19. The original cost of a machine is ₹1200000 and the scarp value of the machine after a useful
life of 3 years is ₹300000, then the book value of the machine at the end 2 years is
(a) ₹100000
(b) ₹250000
(c) ₹ 600000
(d) ₹800000
20. The present value of a sequence of payments of ₹ 800 made at the end of every 6 month and continuing
forever. If money is worth 4%per annum compounded semi-annually, then the present value of the
sequence is:
(a) ₹ 20000
(b) ₹ 40000
(c) ₹ 60000
(d) ₹ 80000
21.
(A) Both (A) and (R) are true and (R) is the correct explanation of (A).
(B) Both (A) and (R) are true but (R) is not the correct explanation of (A).
(C) (A) is true but (R) is false.
(D) (A) is false but (R) is true.
Assertion (A): The effective rate of interest equivalent to a nominal rate of 6% when compounded
continuously is equal to e0.06-1=6.18%
Reason (R): The relation between effective rate (reff ) of interest and nominal rate (r) of interest:
reff=er-1; where 'e'- Euler’s number (approximate value is 2.71828), when compounded continuously.
22. What is the face value of a sinking fund that yields a dividend of ₹1800 at 10% semi-annually?
(a) ₹ 3600
(b) ₹18000
(c) ₹ 24000
(d) ₹ 36000
23. A newspaper printing machine costs ₹ 4,80,000 and estimated scrap value of ₹ 25,000 at the end of its
useful life of 10 years. What is its annual depreciation as per linear method?
(a) ₹ 4,550
(b) ₹ 45,500
(c) ₹ 50,500
(d) ₹ 61,500
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