## SOLVED JAIIB COMBINED PAPER 15:

**1. Simple interest on a sum at 4% p.a. for two years is Rs.800. Find the total amount for the compound interest on the same principal, rate of interest and for the same period is......**

**a. Rs. 8160**

b. Rs. 8610

c. Rs. 10816

d. Rs. 10861

b. Rs. 8610

c. Rs. 10816

d. Rs. 10861

**Ans - c**

**Explanation :**

**Let us first find the principal Amount**

**Simple Interest for 2 years @ 4% = 800**

So, for 1 year @ 4% = 800/2 = 400

So, the Principal Amount = 400/4*100 = 10000

So, for 1 year @ 4% = 800/2 = 400

So, the Principal Amount = 400/4*100 = 10000

**Now let us calculate, compound interest on Rs. 10000 at 4% p.a for 2 years**

**A = P(1+r/100)^n**

= 10000 (1+4/100)^2

= 10000 (1.04)^2

= 10000 (1.0816)

= 10816

= 10000 (1+4/100)^2

= 10000 (1.04)^2

= 10000 (1.0816)

= 10816

**So, Total Amount on Rs. 10000 at 4% p.a for 2 years is : Rs. 10816**

**2. If Rs. 50000 is lent at 10% interest, on which one the interest will be highest?**

**a. Yearly compounding**

b. Half-Yearly compounding

c. Quarterly compounding

d. Monthly compounding

b. Half-Yearly compounding

c. Quarterly compounding

d. Monthly compounding

**Ans - d**

3.

3.

**Rajesh borrowed Rs. 50000 from the bank @ 12% p.a. for 1 year, payable on EMI basis. The amount of EMI will be?**

**a. 4424.24**

b. 4244.24

c. 4424.44

d. 4442.44

b. 4244.24

c. 4424.44

d. 4442.44

**Ans - d**

**Solution:**

**P = 50000**

R = 12% / 12 = 0.01% (In EMI or Equated Monthly Installment, we need to find monthly rate, so we divide rate by 12)

T = 1*12 = 12 (In EMI or Equated Monthly Installment, we multiply time with 12)

R = 12% / 12 = 0.01% (In EMI or Equated Monthly Installment, we need to find monthly rate, so we divide rate by 12)

T = 1*12 = 12 (In EMI or Equated Monthly Installment, 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

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.

4.

**Capital = Rs. 65,000, Assets = Rs.80,000, then Liabilities = Rs......**

**a. Rs. 25,000**

b. Rs. 35,000

c. Rs. 5,000

d. Rs. 15,000

b. Rs. 35,000

c. Rs. 5,000

d. Rs. 15,000

**Ans - d**

5.

5.

**Which is not Tax deductible?**

**a. Interest Payments on Debts**

b. Dividend Payments

c. Both

d. None of these

b. Dividend Payments

c. Both

d. None of these

**Ans - b**

6.

6.

**If the rates in Mumbai are US $1=Rs.42.850. In London market are US $1=Euros 0.7580. Therefore for one Euro we will get**

**a. Rs.56.45**

b. Rs.56.53

c. Rs.56.38

d. Rs.56.50

b. Rs.56.53

c. Rs.56.38

d. Rs.56.50

**Ans - b**

7.

7.

**A sum of money at simple interest amounts to Rs. 2,800 in 2 years and to Rs. 3,250 in 5 years. Find the sum and the rate of interest.**

**a. Rs. 2,500; 5%**

b. Rs. 2,500; 6%

c. Rs. 3,000; 5%

d. Rs. 3,000; 6%

b. Rs. 2,500; 6%

c. Rs. 3,000; 5%

d. Rs. 3,000; 6%

**Ans - b**

8.

8.

**An asset cost Rs. 3,30,000/- has residual value of Rs. 30,000/-, and is expected to last 4 years. Calculate the depreciation for 2nd year using sum of the digits Method.**

**a. Rs. 1,20,000/-**

b. Rs. 90,000/-

c. Rs. 60,000/-

d. Rs. 30,000/-

b. Rs. 90,000/-

c. Rs. 60,000/-

d. Rs. 30,000/-

**Ans - b**

**Explanation :**

**D = (nth/E(sigma)n)(cost-Residual Value)**

E(sigma)n = 1+2+3+4 = 10

E(sigma)n = 1+2+3+4 = 10

**1st year = 4/10(300000) = 120000**

2nd year = 3/10(300000) = 90000

3rd year = 2/10(300000) = 60000

4th year = 1/10(300000) = 30000

9.

2nd year = 3/10(300000) = 90000

3rd year = 2/10(300000) = 60000

4th year = 1/10(300000) = 30000

9.

**The value which bond holder gets on maturity is called as...**

**a. Market Value**

b. Face Value

c. Intrinsic Value

d. Redemption Value

b. Face Value

c. Intrinsic Value

d. Redemption Value

**Ans - d**

10.

10.

**Ram availed a house loan of Rs. 20 lac @ 12% ROI repayable in 15 years. Calculate EMI.**

**a. 23004**

b. 23404

c. 24003

d. 24303

b. 23404

c. 24003

d. 24303

**Ans - c**

**Solution:**

**P = 10 lac**

R = 12% / 12 = 0.01% (In EMI or Equated Monthly Installment), we need to find monthly rate, so we divide rate by 12)

T = 12*15 = 180 (In EMI or Equated Monthly Installment, we multiply time with 12)

R = 12% / 12 = 0.01% (In EMI or Equated Monthly Installment), we need to find monthly rate, so we divide rate by 12)

T = 12*15 = 180 (In EMI or Equated Monthly Installment, we multiply time with 12)

**The formula of EMI =**

P * R * (1 + R)^T ÷ { (1 + R)^T - 1 }

So,

P * R * (1 + R)^T ÷ { (1 + R)^T - 1 }

So,

**EMI = 2000000*0.01*(1+0.01)^180 ÷ {(1+0.01)^180 – 1}**

= (2000000*0.01*5.9958) ÷ 4.9958

= 119916 / 4.9958

= 24003

= (2000000*0.01*5.9958) ÷ 4.9958

= 119916 / 4.9958

= 24003

**11.**

**Even when two projects are mutually exclusive, capital rationing ......**

(i) Results in accurate ranking by NPV method,

(ii) Results in accurate ranking by IRR method

(i) Results in accurate ranking by NPV method,

(ii) Results in accurate ranking by IRR method

**a. Only (i)**

b. Only (ii)

c. Either (i) or (ii)

d. Both (i) and (ii)

b. Only (ii)

c. Either (i) or (ii)

d. Both (i) and (ii)

**Ans - d**

12.

12.

**The cost of a van is 3,25,000 with a residual value of Rs. 75,000. The van has an estimated useful life of 5 years. The amount of depreciation expense using sum-of-the-year's digit in year 5 is...**

**a. 16700**

b. 33300

c. 50000

d. 83300

b. 33300

c. 50000

d. 83300

**Ans - a**