1. What will be the difference between simple and compound interest @ 10% per annum on the sum of Rs 1000 after 4 years ?
Explanation: S.I.= 1000*10/100*4 = 400 C.I.=[1000(1+10/100)4-1000] = 464.10 So difference between simple interest and compound interest will be 464.10 - 400 = 64.10
2. A person invested Rs. 800000 in a bank FDR @ 10% p.a. for 1 year. If interest is compounded on half-yearly basis, the amount payable shall be ......
P = 800000 R = 10% / 2 = 5% (since compounding is semi-annually, rate is divided by 2 T = 1*2 = 2 (since compounding is semi-annually, time is multiplied by 2) FV = P * (1+R)^T So, FV = 800000 * (1+0.05)^2 = 882000
3. Rajesh borrowed Rs. 50000 from the bank @ 12% p.a. for 1 year, payable on EMI basis. The amount of EMI will be?
P = 50000 R = 12% / 12 = 0.01% (In EMI or Equated Monthly Instalment, we need to find monthly rate, so we divide rate by 12) T = 1*12 = 12 (In EMI or Equated Monthly Instalment, we multiply time with 12) The formula of EMI = P * R * (1 + R)^T ÷ { (1 + R)^T - 1 } So, EMI = 50000*0.01*(1+0.01)^12 ÷ {(1+0.01)^12 – 1} = (50000*0.01*1.126825) ÷ 0.126825 = 563.4125 / 0.126825 = 4442.44
4. An asset cost Rs. 16,00,000/- has residual value of Rs. 1,00,000/-, and is expected to last 5 years. Calculate the depreciation for 5th year using sum of the digits Method.
D = (nth/E(sigma)n)(cost-Residual Value) E(sigma)n = 1+2+3+4+5 = 15 Cost-Residual Value = 1600000 - 100000 = 1500000 1st year = 5/15(1500000) = 500000 2nd year = 4/15(1500000) = 400000 3rd year = 3/15(1500000) = 300000 4th year = 2/15(1500000) = 200000 5th year = 1/15(1500000) = 100000