Financial Mathematics — Practice Quiz
CBSE · Class 12 · Applied Mathematics
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Quick Quiz: Financial Mathematics
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Find the present value of a perpetuity that pays ₹800 at the end of each year, if the interest rate is 10% per annum.
A company needs ₹50,000 after 5 years. If they make equal annual deposits at the end of each year at 8% interest, what should be the annual deposit?
What is the effective rate equivalent to 12% nominal rate compounded quarterly?
Calculate EMI for a loan of ₹2,00,000 at 10% annual interest for 3 years using the flat rate method.
Sample Questions
Which of the following are characteristics of a perpetuity? (Select all correct answers)
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Payments continue forever, Present value can be calculated, Uses formula P = R/i
A perpetuity has infinite payments, calculable present value, undefined future amount, and no maturity date. The present value formula is P = R/i. Common misconception: thinking perpetuities have maturity dates.
Find the CAGR if an investment grows from ₹10,000 to ₹16,105 in 5 years.
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10%
CAGR = [(EV/SV)^(1/n) - 1] × 100 = [(16,105/10,000)^(1/5) - 1] × 100 = [(1.6105)^0.2 - 1] × 100 = [1.10 - 1] × 100 = 10%. Common error: Using simple average instead of geometric mean.
What is the purchase price of a ₹1,000, 8% bond redeemable at par in 10 years if the yield rate is 10%?
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₹877
Bond value = R[1-(1+i)⁻ⁿ]/i + F(1+i)⁻ⁿ. Here R = 80, i = 0.10, n = 10, F = 1000. Present value of annuity = 80 × 6.1446 = ₹491.57. Present value of principal = 1000 × 0.3855 = ₹385.54. Total = ₹877.11 ≈ ₹877. Common mistake: Using coupon rate instead of yield rate for discounting.
Calculate annual depreciation for a machine costing ₹80,000 with scrap value ₹8,000 and useful life 8 years using straight line method.
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₹9,000
Annual depreciation = (Cost - Scrap value)/Useful life = (80,000 - 8,000)/8 = 72,000/8 = ₹9,000. This method provides uniform annual depreciation. Common error: Including scrap value in depreciation or dividing by wrong number of years.
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Sources & Official References
- NCERT Official — ncert.nic.in
- CBSE Academic — cbseacademic.nic.in
- CBSE Official — cbse.gov.in
- National Education Policy 2020 — education.gov.in
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