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Mathematics of Finance Quiz – 2

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The quiz about the Mathematics of Finance is used to prepare for CA, CIMA, ICMAP, and MBA exams. MCQs cover many Business-related fields (such as Business Administration, Commerce, and chartered accountancy-related Institutes) in which the subject of Business Mathematics is taught. Let us Start with the Mathematics of Finance Quiz.

The quiz is about Mathematics of Finance which covers the topics of simple interest, compound interest, annuities, future values of annuity, the present value of an annuity, discounted cash flows, cash inflow, cash out flow, present values, and net present value.

1. Ali borrowed Rs 5000 from Akhter at simple interest. After 3 years, Akhter got Rs 300 more than what he had given to Ali. What was the rate of interest per annum?

 
 
 
 

2. A man borrowed Rs 800 at 10% per annum simple interest and immediately lent the whole sum at the rate of 10% per annum compounded annually. What does he gain at the end of the 2nd year?

 
 
 
 

3. The amount of Rs 7500 at compound interest rate of 4\% per annum for 2 years would be _________

 
 
 
 

4. A man received RS 100000 from his friend at 10% per year on simple interest. How much will he pay after 5 years?

 
 
 
 

5. At what annual rate of compound interest will Rs 20000 grow to Rs 27210 after four years?

 
 
 
 

6. The net present value (NPV) of a project is RS 25000 when the discount rate is 15%. Which one of the following statements is correct on the basis of the information given?

 
 
 
 

7. Mrs. Shahida invested her entire savings of Rs 15000 at a simple interest rate of 10%. How many years she would have to wait in order to double his amount?

 
 
 
 

8. Rs. 5000 will give Rs 500 as simple interest at the rate of 5% per annum after __________ years.

 
 
 
 

9. What amount of money should be invested for 5 years to get a sum of Rs 1000000? If interest is compounded half-yearly at the rate of 8% per annum?

 
 
 
 

10. A sum of Rs 10000 is invested in a saving account that pays interest at 10\% per annum compounded annually. If the amount is kept on deposit for 5 years, what will the compound amount equal to?

 
 
 
 

11. A man wants to sell his laptop. There are two offers, one at Rs 10000 cash and the other on the credit of Rs 11800 to be paid after one year. Money could be invested at 18% per annum compounded annually. Which is the better option?

 
 
 
 

12. A company is planning capital investment for which the following year-end cash flows have been estimated

NPV

Use tables to calculate the net present value (NPV) of the project using tables if the company has a cost of capital of 15 percent.

 
 
 
 

13. Complete the following calculation of net present value (NPV) at a 5% discount rate (working to the nearest whole number):

npv

 
 
 
 

14. What is the simple interest rate of a principal amount of RS 1500 which grows to Rs 1725 after five years?

 
 
 
 

15. If the NPV is $\$928$ when the discount rate is 10 percent and $-\$628$ when it is 20 percent, calculate the internal rate of return to two dp.

 
 
 
 

16. A bond increases from $\$3500$ to $\$4000$ over 3 years. Complete the following calculation of the effective annual rate of interest: (i) Three-year ratio=?, (ii) Annual ratio=?, and (iii) Effect annul rate=? percent (on dp)

 
 
 
 

17. If interest is compounded monthly, what total sum will have accumulated after five complete years?

 
 
 
 

18. A building society adds interest monthly to accounts even though interest rates are expressed in annual terms. The current rate is stated as a 4.8 percent annum. If an investor deposits $\$2500$ on 1 January, calculate the value of the account on 31 August, giving your answer correct to the nearest Penny.

 
 
 
 

19. A sum of money placed at a compound interest doubles itself in 5 years. It will amount to eight times in:

 
 
 
 

20. The net present value at a discount rate of 12% is Rs -2000 and at 11% it is Rs 2808. Which one of the following statements about the internal rate of return (IRR) is correct?

 
 
 
 

Mathematics of Finance Quiz

  • A company is planning capital investment for which the following year-end cash flows have been estimated Use tables to calculate the net present value (NPV) of the project using tables if the company has a cost of capital of 15 percent.
    NPV
  • If the NPV is $\$928$ when the discount rate is 10 percent and $-\$628$ when it is 20 percent, calculate the internal rate of return to two dp.
  • The amount of Rs 7500 at a compound interest rate of 4\% per annum for 2 years would be ——–
  • Mrs. Shahida invested her entire savings of Rs 15000 at a simple interest rate of 10%. How many years she would have to wait in order to double his amount?
  • What amount of money should be invested for 5 years to get a sum of Rs 1000000? If interest is compounded half-yearly at the rate of 8% per annum?
  • Rs. 5000 will give Rs 500 as simple interest at the rate of 5% per annum after ——– years.
  • What is the simple interest rate of a principal amount of RS 1500 which grows to Rs 1725 after five years?
  • A man received RS 100000 from his friend at 10% per year on simple interest. How much will he pay after 5 years?
  • A sum of money placed at compound interest doubles itself in 5 years. It will amount to eight times in:
  • Ali borrowed Rs 5000 from Akhter at simple interest. After 3 years, Akhter got Rs 300 more than what he had given to Ali. What was the rate of interest per annum?
  • A sum of Rs 10000 is invested in a savings account that pays interest at 10\% per annum compounded annually. If the amount is kept on deposit for 5 years, what will the compound amount equal to?
  • A man wants to sell his laptop. There are two offers, one at Rs 10000 cash and the other on the credit of Rs 11800 to be paid after one year. Money could be invested at 18% per annum compounded annually. Which is the better option?
  • A man borrowed Rs 800 at 10% per annum simple interest and immediately lent the whole sum at the rate of 10% per annum compounded annually. What does he gain at the end of the 2nd year?
  • The net present value at a discount rate of 12% is Rs -2000 and at 11% it is Rs 2808. Which one of the following statements about the internal rate of return (IRR) is correct?
  • The net present value (NPV) of a project is RS 25000 when the discount rate is 15%. Which one of the following statements is correct based on the information given?
  • At what annual rate of compound interest will Rs 20000 grow to Rs 27210 after four years?
  • A building society adds interest monthly to accounts even though interest rates are expressed in annual terms. The current rate is stated as a 4.8 percent annum. If an investor deposits $\$2500$ on 1 January, calculate the value of the account on 31 August, giving your answer correct to the nearest Penny.
  • A bond increases from $\$3500$ to $\$4000$ over 3 years. Complete the following calculation of the effective annual rate of interest: (i) Three-year ratio=?, (ii) Annual ratio=?, and (iii) Effect annul rate=? percent (on dp)
  • Complete the following calculation of net present value (NPV) at a 5% discount rate (working to the nearest whole number):
    npv
  • If interest is compounded monthly, what total sum will have accumulated after five complete years?
Mathematics of Finance

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Quiz Mathematics of Finance – 1

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The Quiz Mathematics of Finance for the preparation of Exams related to CA, CIMA, ICMAP, and MBA. MCQs cover many Business-related fields (such as Business Administration, Commerce, and chartered accountancy-related Institutes) in which the subject of Business Mathematics is taught. Each quiz contains 20 multiple choice questions from Business Mathematics. Let us start with the Quiz Mathematics of Finance.

Please go to Quiz Mathematics of Finance – 1 to view the test

Quiz Mathematics of Finance

  • The price of a tricycle is $2,900 and the sales tax is 16%. The amount of sales tax on 40 such tricycles should be
  • If the MP of a laptop is $22,000 and the sales tax imposed is 16%. The total amount that has to pay is Explanation: $22000+22000*0.16=25520$
  • A motorbike price is $40,000 inclusive of 16% sales tax. The original price should be
  • To pay a certain amount of tax as a value-added tax on the purchase of an item is known as
  • The tax charged on all incomes during the financial year from 1st July to 30th June is termed as
  • The salary received after necessary deductions from the gross salary is termed as
  • An investment rises in value from 12000 to 250,000 over 15 years. Calculate the percentage increase per year, to one d.p.
  • If a sum of 15,000 is invested at 4.6 percent per annum, find its value after 5 years, to the nearest $.
  • A company has to choose between borrowing 100,000 at 3% a quarter in order to modernize now or saving at 2% a quarter in order to modernize in 4 years’ time, at an estimated cost of 1170,00. Throughout this question, use tables whenever possible. Find the cumulative discount factor appropriate to quarter-end payments of $1 per quarter at 3% per quarter over 4 years.
  • A company has to choose between borrowing 100,000 at 3% a quarter in order to modernize now or saving at 2% a quarter in order to modernize in 4 years’ time, at an estimated cost of 1170,00. Throughout this question, use tables whenever possible. Calculate the amount $X$ which must be paid per quarter if the company borrows 100,000 now repayable at the end of each quarter over 4 years. Give your answer correct to the nearest $.
  • A company has to choose between borrowing 100,000 at 3% a quarter in order to modernize now or saving at 2% a quarter in order to modernize in 4 years’ time, at an estimated cost of 1170,00. Throughout this question, use tables whenever possible. Calculate the amount $Y$ which must be saved at the end of each quarter if the company wishes to cover the cost of modernization in 4 years’ time. Give your answer to the nearest $.
  • Calculate the present value of an annuity of 2800 per annum, payable at the end of each year for 10 years at a discount rate of 4%. Use tables and give your answer to the nearest $.
  • An asset originally worth 80,000 depreciates at 28% per annum. Find its value to the nearest at the end of 3 years.
  • A sum of $\$30,000$ is invested at a nominal rate of 12\% per annum. Find its value after 3 years if interest is compounded every month. Give your answer to the nearest $.
  • Rearrange the formula $V=P(1+r)^n$ to make $r$ the subject.
  • An item sells for 4.39 including value-added tax at 17.5%. If the tax were reduced to 16%, the new selling price to the nearest penny will be
  • The economic order quantity (EOQ) for a particular stock item is given by the expression $EOQ = \sqrt{\frac{2C_0D}{c_h}}$. If $C_0=2$ per order, $D=1000$ items and $C_h=0.25$ per time, then EOQ (rounded to the nearest whole number) will be
  • The economic order quantity (EOQ) for a particular stock item is given by the expression EOQ = $\sqrt{\frac{2C_0D}{c_h}}$. If for a different stock item, EOQ = 200 items, $C_0=4$ per order and $D=1000$ items, then $C_h$ (in $\$$ per item) will be
  • Given the scenario in the spreadsheet below, what Excel formula is required for ROI
    q40
  • Given the scenario in the spreadsheet below, what Excel formula is required for NPV
    q40
Quiz Mathematics of Finance

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Basic Mathematics Quiz 2

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MCQs about Basic Business and Applied Mathematics for the preparation of Exams related to CA, CIMA, ICMAP, and MBA. MCQs cover many Business-related fields (such as Business Administration, Commerce, and chartered accountancy-related Institutes) in which the subject of Business Mathematics is taught. Let us start with the Basic Mathematics Quiz.

Please go to Basic Mathematics Quiz 2 to view the test

Basic Mathematics Quiz

  • Sara and Ali earned a profit of $500,000 from a business and their ratio of investment was 5:8, respectively. The profit of each should be
  • (Cost Price – Selling Price ) is equal to
  • (Selling Price – Cost Price) is called
  • During the sale, a shop offers a discount of 8% on the marked price. If the marked price is $5500, then the purchase price of an oven should be
  • The price at which a particular item is purchased by a shopkeeper is known as
  • If the sales price is 672 and the profit is 5%, then the cost price should be
  • A trader sold a television for $1500. The price should he sell to get a profit of 20% is
  • If the selling price is the selling price, the cost price is the cost price, we get a loss when
  • A deduction that is offered on the MP or the list price of items by the seller to the purchaser is called
  • A phone was purchased for £4000 and sold for £4800. The profit percentage should be
  • Marked price – sales price is equal to
  • (Profit  ⁄ Cost Price) $\times$ 100 is equal to
  • If the capital of partners is invested for the same length of time, the partnership is said to be none of the above
  • (Cost price – Loss) is equal to
  • The marked price of a fan is £850, it is sold for £800. The percentage discount allowed is
  • (Discount  ⁄  MP) $\times$ 100 is equal to
  • (Loss⁄Cost Price) $\times$ 100 is equal to
  • If the selling price of an item is greater than its cost price, then we earn
  • (Profit + cost) price is equal to
  • The annual income of a person is £530,000 and the exempted amount is £280,000. The income tax payable at the rate of 0.75% would be
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What is Rounding off?

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Introduction to Rounding Off

The concept and term “rounding off” is the process of simplifying a number by bringing the number closer to the next number and keeping its value.

In most of the everyday situations, we do not need to use highly sensitive measuring devices (instruments). the accuracy of our measurement depends on the purpose for which we use the information.

Rounding off Examples

Example: Suppose someone uses a compass as a guide in going from one end of the school to the other. It would not be a serious error if he/ she is 1o of course. However, 1o of course on a journey to the moon will mean an error of 644000 km.

Besides the error arising from the use of different instruments/ devices, the person taking the measurement is another source of error. For example, in school/ college athletics meets, there are usually two or more time-keepers for the first placing of a (say) 100-meter race, and time-keepers may have slightly different times on their devices (such as sports watch). Therefore, all physical measurements such as mass, length, time, volume, and area can never be accurate. The accuracy depends on the degree of the measuring device (instrument) and the person recording (taking) the measurement. Both of them can never be accurate.

Rules for Rounding off Numbers

Rule 1: Determine what your rounding digit is and look at the digit to the right of it. If the number is 1, 2, 3, or 4, simply drop all digits to the right of the rounding digit. For example,

5.432 may be rounded off to 5.42 nearest to the hundredth place.
5.432 may be rounded off to 5.4 nearest to the tenth place.
5.432 may be rounded off to 5 nearest to the unit’s place.

Rule 2: Determine what your rounding digit is and look at the digit to the right of it. If the number is 5, 6, 7, 8, or 9 add one to the rounding digit and drop all digits to the right of the rounding digits. For example,

3.786 may be rounded off to 3.79 nearest to the hundredth place.
3.786 may be rounded off to 3.8 nearest to the tenth place.
3.876 may be rounded off to 3.9 nearest to the unit place.

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