Case Study / Scenario-Based MCQs for Sub-Topics of Topic 15: Financial Mathematics

Question 1. Mr. Sharma deposited $\textsf{₹}50,000$ in a savings account. The bank promises to pay him an extra $\textsf{₹}4,000$ after 1 year for keeping the money with them. In this scenario, what is the $\textsf{₹}50,000$ called?

(A) Amount

(B) Interest

(C) Principal

(D) Accumulation

Question 2. Ms. Priya borrowed $\textsf{₹}1,00,000$ from a relative and agreed to return $\textsf{₹}1,10,000$ after two years. The $\textsf{₹}1,10,000$ she will return is known as the:

(A) Interest Paid

(B) Principal

(C) Initial Loan Amount

(D) Amount

Question 3. Mr. Kumar invested $\textsf{₹}2,00,000$ for 3 years. At the end of 3 years, his investment grew to $\textsf{₹}2,40,000$. The extra $\textsf{₹}40,000$ represents the:

(A) Principal

(B) Amount

(C) Interest

(D) Time Period

Question 4. A bank offers a Personal Loan at 15% per annum. This percentage (15%) indicates the:

(A) Principal amount

(B) Total amount to be repaid

(C) Cost of borrowing money

(D) Duration of the loan

Question 5. A Fixed Deposit scheme mentions an interest rate of 7.5% p.a. The term "p.a." refers to the:

(A) Periodic rate

(B) Total number of periods

(C) Annual rate

(D) Monthly rate

Question 6. A recurring deposit requires you to invest a fixed sum every month. The bank offers 6% interest per annum, calculated monthly. The rate used for monthly calculations (6% divided by 12) is the:

(A) Annual rate

(B) Nominal rate

(C) Effective rate

(D) Periodic rate

Question 7. Mr. Verma started with $\textsf{₹}1,00,000$. After 5 years, his investment became $\textsf{₹}1,50,000$. This increase from $\textsf{₹}1,00,000$ to $\textsf{₹}1,50,000$ demonstrates the concept of:

(A) Depreciation

(B) Taxation

(C) Loan Repayment

(D) Accumulation

Question 8. You are comparing two investment options. Option A offers 8% interest for 2 years, and Option B offers 8% for 3 years. To understand how your money grows, you would focus on the concept of:

(A) Principal

(B) Time Value of Money

(C) Periodic Rate

(D) Simple Interest

Question 9. A microfinance company lends $\textsf{₹}10,000$ for a short period. The borrower repays $\textsf{₹}10,500$ after 6 months. The difference of $\textsf{₹}500$ is the:

(A) Principal

(B) Amount

(C) Interest

(D) Loan Term

Question 10. A deposit of $\textsf{₹}25,000$ is made for 5 years at a certain interest rate. The final value after 5 years is $\textsf{₹}35,000$. The $\textsf{₹}25,000$ represents the:

(A) Interest

(B) Amount

(C) Accumulation

(D) Principal

Question 1. Mr. Gupta took a simple interest loan of $\textsf{₹}15,000$ at 10% per annum for 2 years. How much total interest will he pay?

(A) $\textsf{₹}1,500$

(B) $\textsf{₹}3,000$

(C) $\textsf{₹}15,300$

(D) $\textsf{₹}18,000$

Question 2. A sum of $\textsf{₹}20,000$ is invested at 7% simple interest per annum for 4 years. What will be the total amount (Principal + Interest) after 4 years?

(A) $\textsf{₹}5,600$

(B) $\textsf{₹}20,560$

(C) $\textsf{₹}25,600$

(D) $\textsf{₹}27,000$

Question 3. If the simple interest on $\textsf{₹}8,000$ for 3 years is $\textsf{₹}1,920$, what is the annual simple interest rate?

(A) 6%

(B) 8%

(C) 10%

(D) 12%

Question 4. How long will it take for an investment of $\textsf{₹}12,000$ to earn $\textsf{₹}3,600$ in simple interest at an annual rate of 6%?

(A) 3 years

(B) 4 years

(C) 5 years

(D) 6 years

Question 5. What principal amount was invested if it earned $\textsf{₹}2,500$ in simple interest over 5 years at an annual rate of 5%?

(A) $\textsf{₹}5,000$

(B) $\textsf{₹}10,000$

(C) $\textsf{₹}15,000$

(D) $\textsf{₹}20,000$

Question 6. A sum of money triples itself in 10 years at simple interest. What is the annual rate of interest?

(A) 10%

(B) 15%

(C) 20%

(D) 25%

Question 7. Find the simple interest on $\textsf{₹}30,000$ at 8% per annum for 9 months.

(A) $\textsf{₹}1,800$

(B) $\textsf{₹}2,400$

(C) $\textsf{₹}2,700$

(D) $\textsf{₹}1,600$

Question 8. An investor received $\textsf{₹}7,000$ as simple interest on an investment of $\textsf{₹}28,000$ at a certain rate in 5 years. If he had invested $\textsf{₹}40,000$ at the same rate for the same period, how much interest would he have earned?

(A) $\textsf{₹}8,000$

(B) $\textsf{₹}9,000$

(C) $\textsf{₹}10,000$

(D) $\textsf{₹}12,000$

Question 9. The amount after 4 years on a principal of $\textsf{₹}6,000$ at 5% simple interest per annum is:

(A) $\textsf{₹}1,200$

(B) $\textsf{₹}6,300$

(C) $\textsf{₹}7,200$

(D) $\textsf{₹}8,400$

Question 10. A bank offers simple interest. If $\textsf{₹}10,000$ becomes $\textsf{₹}11,000$ in 2 years, what amount will $\textsf{₹}15,000$ become in 3 years at the same rate?

(A) $\textsf{₹}1,500$

(B) $\textsf{₹}16,500$

(C) $\textsf{₹}17,250$

(D) $\textsf{₹}18,000$

Question 1. Mr. Roy invests $\textsf{₹}20,000$ in a fixed deposit that pays 8% per annum compound interest, compounded annually. What is the total amount he will receive after 3 years?

(A) $\textsf{₹}24,800$

(B) $\textsf{₹}25,920

(C) $\textsf{₹}25,194.24$

(D) $\textsf{₹}26,000

Question 2. Calculate the compound interest earned on $\textsf{₹}1,00,000$ invested at 10% per annum compounded semi-annually for 1 year.

(A) $\textsf{₹}10,000$

(B) $\textsf{₹}10,250$

(C) $\textsf{₹}5,000$

(D) $\textsf{₹}10,000$

Question 3. A sum of money amounts to $\textsf{₹}66,550$ in 3 years at 10% per annum compound interest, compounded annually. What was the original principal sum?

(A) $\textsf{₹}50,000$

(B) $\textsf{₹}55,000$

(C) $\textsf{₹}60,000$

(D) $\textsf{₹}45,000$

Question 4. At what rate percent per annum compound interest will $\textsf{₹}3,000$ amount to $\textsf{₹}3,630$ in 2 years, compounded annually?

(A) 5%

(B) 8%

(C) 10%

(D) 12%

Question 5. Find the compound interest on $\textsf{₹}16,000$ for 9 months at 12% per annum, compounded quarterly.

(A) $\textsf{₹}1,440$

(B) $\textsf{₹}1,458.24$

(C) $\textsf{₹}1,500$

(D) $\textsf{₹}1,920$

Question 6. The difference between simple interest and compound interest on a sum for 2 years at 5% per annum is $\textsf{₹}25$. What is the sum?

(A) $\textsf{₹}5,000$

(B) $\textsf{₹}8,000$

(C) $\textsf{₹}10,000$

(D) $\textsf{₹}12,500$

Question 7. A sum of money placed at compound interest doubles itself in 4 years. In how many years will it become 16 times itself at the same rate?

(A) 8 years

(B) 12 years

(C) 16 years

(D) 20 years

Question 8. If the compound interest on a certain sum for 2 years at 4% per annum is $\textsf{₹}102$, what is the simple interest on the same sum at the same rate for the same period?

(A) $\textsf{₹}100$

(B) $\textsf{₹}101

(C) $\textsf{₹}103.04$

(D) $\textsf{₹}104.04$

Question 9. An investment of $\textsf{₹}5,000$ grows to $\textsf{₹}5,300$ in the first year and $\textsf{₹}5,618$ in the second year. This pattern suggests the interest is being calculated using:

(A) Simple Interest

(B) Compound Interest

(C) A variable interest rate

(D) Simple Interest with additional fees

Question 10. A student borrowed $\textsf{₹}6,000$ at 10% per annum compound interest. He repaid $\textsf{₹}2,000$ at the end of each year. How much amount is still due at the end of the 3rd year (approximately)?

(A) $\textsf{₹}2,000$

(B) $\textsf{₹}2,326

(C) $\textsf{₹}2,600$

(D) $\textsf{₹}2,928

Question 1. Bank A offers 9% per annum compounded annually. Bank B offers 8.8% per annum compounded quarterly. Which bank offers a better effective rate of return for an investor?

(A) Bank A

(B) Bank B

(C) Both offer the same effective rate.

(D) Cannot be determined without the principal amount.

Question 2. A loan is advertised at a nominal rate of 18% per annum. If interest is compounded monthly, what is the approximate effective annual rate of interest?

(A) 18%

(B) 19.56%

(C) 18.81%

(D) 18.15%

Question 3. An investment yields an effective annual rate of 6.18%. If the nominal rate is 6% per annum, how frequently is the interest likely being compounded?

(A) Annually

(B) Semi-annually

(C) Quarterly

(D) Monthly

Question 4. You have two loan offers: Offer 1 at 15% per annum compounded monthly, and Offer 2 at 15.5% per annum simple interest. To determine which is cheaper over a year, you should compare the effective annual rate of Offer 1 with the simple interest rate of Offer 2. What is the approximate effective rate of Offer 1?

(A) 15%

(B) 16.08%

(C) 16.18%

(D) 15.5%

Question 5. A company is evaluating two investment opportunities. Opportunity X offers a return of 10% per annum compounded semi-annually. Opportunity Y offers a return of 10.2% per annum compounded annually. Which opportunity offers a better effective annual return?

(A) Opportunity X

(B) Opportunity Y

(C) Both offer the same effective return.

(D) Cannot be determined without the investment amount.

Question 6. If the nominal rate of interest is 5% per annum, what is the effective annual rate if interest is compounded daily (assume 365 days in a year)?

(A) 5.000%

(B) 5.012%

(C) 5.127%

(D) 5.139%

Question 7. An effective rate of 7.18% corresponds to a nominal rate of 7% per annum compounded:

(A) Annually

(B) Semi-annually

(C) Quarterly

(D) Monthly

Question 8. When comparing two savings accounts, one offering 4% p.a. compounded quarterly and another offering a different nominal rate compounded semi-annually, which rate should you look at to make the best decision?

(A) The nominal rates

(B) The periodic rates

(C) The effective annual rates

(D) The interest earned in the first quarter

Question 9. If the effective annual rate of interest is 10%, it means that an investment of $\textsf{₹}100$ will grow to:

(A) $\textsf{₹}110$ in one year.

(B) $\textsf{₹}100 + 10 \times 1$ in one year (if simple interest).

(C) $\textsf{₹}110$ in one year, regardless of the compounding frequency used to achieve that effective rate.

(D) $\textsf{₹}105$ in six months if compounded semi-annually.

Question 10. A bond offers a coupon rate of 8% per annum, paid semi-annually. A comparable bond's yield is quoted as 8.2% effective annual rate. To evaluate the 8% coupon bond accurately, you would need to compare its effective annual rate to 8.2%. What is the approximate effective rate of the 8% semi-annual coupon bond?

(A) 8.00%

(B) 8.16%

(C) 8.20%

(D) 8.32%

Question 1. You want to have $\textsf{₹}5,00,000$ in your bank account in 5 years for a down payment on a house. If the bank offers an interest rate of 6% per annum compounded annually, how much money do you need to deposit today?

(A) $\textsf{₹}3,73,629$

(B) $\textsf{₹}3,90,000$

(C) $\textsf{₹}4,00,000$

(D) $\textsf{₹}5,00,000$

Question 2. If you invest $\textsf{₹}1,00,000$ today at an interest rate of 9% per annum compounded annually, what will be the future value of your investment after 10 years?

(A) $\textsf{₹}1,90,000$

(B) $\textsf{₹}2,15,892.50$

(C) $\textsf{₹}2,36,736.37$

(D) $\textsf{₹}2,59,374.25$

Question 3. A project requires an initial investment of $\textsf{₹}1,00,000$ and is expected to generate cash inflows of $\textsf{₹}60,000$ in Year 1 and $\textsf{₹}70,000$ in Year 2. If the required rate of return (discount rate) is 10%, what is the Net Present Value (NPV) of this project?

(A) $\textsf{₹}30,000$

(B) $\textsf{₹}8,264.46$

(C) $\textsf{₹}13,223.14$

(D) $-\textsf{₹}13,223.14$

Question 4. Based on the NPV calculated in the previous question (NPV $\approx \textsf{₹}13,223.14$), should you accept or reject this project according to the NPV decision rule?

(A) Reject, because the NPV is positive.

(B) Accept, because the NPV is positive.

(C) Accept, because the NPV is less than the initial investment.

(D) Reject, because the NPV is greater than zero.

Question 5. A bond promises to pay $\textsf{₹}50$ in one year. If the discount rate is 5%, what is the present value of this $\textsf{₹}50$ payment?

(A) $\textsf{₹}50$

(B) $\textsf{₹}47.62$

(C) $\textsf{₹}52.50$

(D) $\textsf{₹}45.00$

Question 6. You are comparing two lottery payout options: $\textsf{₹}10,00,000$ today or $\textsf{₹}11,00,000$ in 2 years. If your investment opportunity rate is 7% per annum, which option is financially better today?

(A) The $\textsf{₹}10,00,000$ today.

(B) The $\textsf{₹}11,00,000$ in 2 years.

(C) Both are equally valuable.

(D) Cannot be determined without more information.

Question 7. An asset purchased for $\textsf{₹}50,000$ is expected to be sold for $\textsf{₹}70,000$ in 3 years. If the annual return required is 12%, what is the present value of the expected selling price? Is the investment worthwhile based on PV?

(A) PV $\approx \textsf{₹}49,865$. Yes, because PV > Cost.

(B) PV $\approx \textsf{₹}49,865$. No, because PV < Cost.

(C) PV $\approx \textsf{₹}70,000$. Yes, because PV > Cost.

(D) PV $\approx \textsf{₹}98,000$. Yes, because PV > Cost.

Question 8. If you want to have $\textsf{₹}1,00,000$ in your account in 4 years and the bank pays 5% compounded semi-annually, how much must you deposit today?

(A) $\textsf{₹}82,270$

(B) $\textsf{₹}82,000$

(C) $\textsf{₹}85,000$

(D) $\textsf{₹}80,000$

Question 9. An investment offers $\textsf{₹}2,000$ today and $\textsf{₹}2,200$ in one year. If the discount rate is 8% per annum, what is the total present value of these cash flows?

(A) $\textsf{₹}4,200$

(B) $\textsf{₹}4,037$

(C) $\textsf{₹}4,100$

(D) $\textsf{₹}4,000$

Question 10. A company is considering a project with cash flows: Year 0 ($\textsf{₹}-50,000$), Year 1 ($\textsf{₹}20,000$), Year 2 ($\textsf{₹}25,000$), Year 3 ($\textsf{₹}30,000$). If the discount rate is 10%, which step is correct in calculating NPV?

(A) Calculate the future value of all cash flows at Year 3.

(B) Sum the cash flows directly: $-50000 + 20000 + 25000 + 30000$.

(C) Calculate the present value of $\textsf{₹}20,000$ at 10% for 1 year, $\textsf{₹}25,000$ at 10% for 2 years, and $\textsf{₹}30,000$ at 10% for 3 years, then sum these PVs and subtract $\textsf{₹}50,000$.

(D) Calculate the simple interest on each cash flow.

Question 1. Mr. A plans to deposit $\textsf{₹}10,000$ at the end of each year for 5 years into a savings account that pays 6% interest per annum. What is the future value of this stream of deposits at the end of 5 years?

(A) $\textsf{₹}50,000$

(B) $\textsf{₹}53,000$

(C) $\textsf{₹}56,371$

(D) $\textsf{₹}59,753$

Question 2. Ms. B will receive $\textsf{₹}2,000$ at the end of each quarter for the next 3 years. If the interest rate is 8% per annum compounded quarterly, what is the present value of this stream of payments?

(A) $\textsf{₹}20,000$

(B) $\textsf{₹}21,145$

(C) $\textsf{₹}22,000$

(D) $\textsf{₹}23,100$

Question 3. You are evaluating a rental property that is expected to generate $\textsf{₹}15,000$ in rent at the beginning of each month for the next 2 years. If the discount rate is 12% per annum compounded monthly, what is the present value of these rent payments?

(A) $\textsf{₹}3,20,000$

(B) $\textsf{₹}3,29,410$

(C) $\textsf{₹}3,32,704$

(D) $\textsf{₹}3,60,000$

Question 4. Mr. C wins a lottery that pays him $\textsf{₹}50,000$ at the end of each year for the next 20 years. If he can invest money at 7% per annum, what is the present value of his lottery winnings?

(A) $\textsf{₹}10,00,000$

(B) $\textsf{₹}5,00,000$

(C) $\textsf{₹}5,27,340$

(D) $\textsf{₹}5,68,920$

Question 5. You want to accumulate $\textsf{₹}8,00,000$ in 10 years by making equal annual deposits at the end of each year. If the interest rate is 9% per annum, how much must you deposit each year?

(A) $\textsf{₹}80,000$

(B) $\textsf{₹}52,400$

(C) $\textsf{₹}50,000$

(D) $\textsf{₹}48,000$

Question 6. A company needs to make annual payments of $\textsf{₹}25,000$ at the beginning of each year for a lease agreement lasting 5 years. If the appropriate interest rate is 6% per annum, what is the present value of these lease payments?

(A) $\textsf{₹}1,05,304$

(B) $\textsf{₹}1,18,786$

(C) $\textsf{₹}1,12,500$

(D) $\textsf{₹}1,00,000$

Question 7. You deposit $\textsf{₹}5,000$ every 6 months into an account paying 7% per annum compounded semi-annually. What is the value of this investment after 4 years, assuming deposits are made at the end of each 6-month period?

(A) $\textsf{₹}40,000$

(B) $\textsf{₹}43,515

(C) $\textsf{₹}40,601

(D) $\textsf{₹}44,800$

Question 8. Mr. D receives an income stream of $\textsf{₹}30,000$ at the end of each year for 15 years. If the appropriate discount rate is 8% per annum, what is the present value of this income stream?

(A) $\textsf{₹}2,70,000$

(B) $\textsf{₹}2,56,500$

(C) $\textsf{₹}2,88,560$

(D) $\textsf{₹}3,10,000$

Question 9. A sinking fund requires deposits of $\textsf{₹}20,000$ at the end of each year for 8 years to reach a target amount. If the fund earns 7.5% per annum, what will be the total amount accumulated in the fund at the end of 8 years?

(A) $\textsf{₹}1,60,000$

(B) $\textsf{₹}2,00,000$

(C) $\textsf{₹}2,06,368$

(D) $\textsf{₹}2,14,540$

Question 10. If you want to have $\textsf{₹}15,00,000$ in 20 years and can deposit money at the beginning of each year in an investment earning 10% per annum, what annual deposit is required?

(A) $\textsf{₹}26,190$

(B) $\textsf{₹}23,809

(C) $\textsf{₹}21,645$

(D) $\textsf{₹}28,100$

Question 1. A charitable trust wants to establish a fund that will provide $\textsf{₹}10,000$ in scholarships every year, starting from next year, indefinitely. If the fund can earn 5% per annum, how much money needs to be invested today to set up this perpetuity?

(A) $\textsf{₹}10,000$

(B) $\textsf{₹}50,000$

(C) $\textsf{₹}1,00,000$

(D) $\textsf{₹}2,00,000$

Question 2. A company issues a perpetual bond (consol bond) that promises to pay an annual coupon of $\textsf{₹}500$ forever. If the market requires a rate of return of 6% on similar bonds, what is the theoretical price of this bond today?

(A) $\textsf{₹}500$

(B) $\textsf{₹}8,333.33$

(C) $\textsf{₹}50,000$

(D) $\textsf{₹}60,000$

Question 3. Mr. P wants to create a fund that will provide $\textsf{₹}5,000$ at the beginning of each month forever, starting immediately. If the fund can earn 9% per annum compounded monthly, how much must he invest today?

(A) $\textsf{₹}6,66,666.67$

(B) $\textsf{₹}6,71,666.67$

(C) $\textsf{₹}6,00,000$

(D) $\textsf{₹}5,00,000$

Question 4. A company needs to repay a debt of $\textsf{₹}25,00,000$ in 5 years. It decides to set up a sinking fund, making equal annual deposits at the end of each year into an account earning 8% per annum. How much should the company deposit annually?

(A) $\textsf{₹}5,00,000$

(B) $\textsf{₹}4,25,400$

(C) $\textsf{₹}4,14,055

(D) $\textsf{₹}3,80,000$

Question 5. A municipality plans to replace a bridge in 15 years at an estimated cost of $\textsf{₹}10$ Crore. They establish a sinking fund that earns 6% per annum compounded annually. What annual contribution (at the end of each year) is required to meet this future cost?

(A) $\textsf{₹}66.67$ Lakhs

(B) $\textsf{₹}52.40$ Lakhs

(C) $\textsf{₹}42.96$ Lakhs

(D) $\textsf{₹}38.90$ Lakhs

Question 6. If the interest rate available for the sinking fund in the previous question suddenly increases from 6% to 7%, how would this affect the required annual contribution (assuming the target amount and time remain the same)?

(A) The required annual contribution would increase.

(B) The required annual contribution would decrease.

(C) The required annual contribution would remain the same.

(D) The target amount would need to be increased.

Question 7. You want to fund a perpetual stream of annual payments of $\textsf{₹}25,000$, starting next year. If the expected rate of return on your investment is 8% per annum, how much lump sum is needed today?

(A) $\textsf{₹}25,000$

(B) $\textsf{₹}2,00,000$

(C) $\textsf{₹}3,12,500$

(D) $\textsf{₹}25,00,000$

Question 8. A company has a debt obligation of $\textsf{₹}1$ Crore due in 7 years. They set up a sinking fund with semi-annual deposits earning 5% per annum compounded semi-annually. How many total deposits will be made into the sinking fund?

(A) 7

(B) 14

(C) 3.5

(D) 2

Question 9. If a preferred stock pays a fixed annual dividend of $\textsf{₹}120$ and similar investments yield a return of 5% per annum, what is the estimated market value of this preferred stock based on the perpetuity concept?

(A) $\textsf{₹}120$

(B) $\textsf{₹}2,400$

(C) $\textsf{₹}1,200$

(D) $\textsf{₹}6,000$

Question 10. An investor wants to receive $\textsf{₹}1,000$ at the end of each quarter indefinitely. If the prevailing quarterly interest rate is 2%, how much must they invest now?

(A) $\textsf{₹}50,000$

(B) $\textsf{₹}1,00,000$

(C) $\textsf{₹}20,000$

(D) $\textsf{₹}40,000$

Question 1. Mr. Sharma takes a home loan of $\textsf{₹}20,00,000$ at an annual interest rate of 9% compounded monthly for a tenure of 20 years. What is the monthly interest rate he needs to use for the EMI calculation?

(A) 9%

(B) 0.75%

(C) 0.9%

(D) 0.09%

Question 2. For the loan in the previous question ($\textsf{₹}20,00,000$ at 9% p.a. compounded monthly for 20 years), what is the total number of monthly installments he will pay?

(A) 20

(B) 9

(C) 240

(D) 180

Question 3. A car loan of $\textsf{₹}5,00,000$ is taken at 10% per annum compounded monthly for 5 years. Using the EMI formula $M = P \times \frac{r(1+r)^n}{(1+r)^n - 1}$, where $P=5,00,000$, $r=0.10/12$, and $n=5 \times 12 = 60$, what is the approximate monthly EMI?

(A) $\textsf{₹}10,000$

(B) $\textsf{₹}10,624$

(C) $\textsf{₹}10,500$

(D) $\textsf{₹}10,374$

Question 4. Ms. Kaur has a loan with a remaining balance of $\textsf{₹}8,00,000$. Her next EMI is $\textsf{₹}9,500$. If the monthly interest rate is 0.75%, how much of this EMI will go towards interest payment?

(A) $\textsf{₹}6,000$

(B) $\textsf{₹}3,500$

(C) $\textsf{₹}9,500$

(D) $\textsf{₹}8,000$

Question 5. For the EMI payment in the previous question ($\textsf{₹}9,500$ EMI, $\textsf{₹}6,000$ interest), how much of the EMI will go towards reducing the principal balance?

(A) $\textsf{₹}9,500$

(B) $\textsf{₹}6,000$

(C) $\textsf{₹}3,500$

(D) $\textsf{₹}8,00,000$

Question 6. Mr. Das took a personal loan of $\textsf{₹}3,00,000$ for 3 years at 12% per annum compounded monthly. After paying 12 EMIs, he wants to know the remaining loan balance. What concept is used to determine this?

(A) Simple Interest Calculation

(B) Future Value of an Annuity

(C) Calculating the present value of the remaining EMIs.

(D) Calculating the future value of the paid EMIs.

Question 7. A borrower has a loan and the EMI is $\textsf{₹}15,000$. In the first EMI, the interest component was $\textsf{₹}8,000$. In the 50th EMI (out of 120), which of the following is most likely true?

(A) The interest component is higher than $\textsf{₹}8,000$.

(B) The principal component is lower than the interest component.

(C) The interest component is lower than $\textsf{₹}8,000$, and the principal component is higher than the principal component in the first EMI.

(D) The entire EMI is now just principal.

Question 8. You are planning to buy a car and can afford an EMI of up to $\textsf{₹}8,000$ per month. If the loan interest rate is 10% p.a. compounded monthly and the tenure is 7 years, what is the maximum loan amount you can afford?

(A) $\textsf{₹}5,00,000$

(B) $\textsf{₹}5,05,000$

(C) $\textsf{₹}5,10,000$

(D) $\textsf{₹}5,20,000$

Question 9. A borrower takes a loan of $\textsf{₹}4,00,000$ and repays it with EMIs over 5 years. The total amount repaid through EMIs is $\textsf{₹}5,50,000$. What is the total interest paid on this loan?

(A) $\textsf{₹}4,00,000$

(B) $\textsf{₹}1,50,000$

(C) $\textsf{₹}5,50,000$

(D) $\textsf{₹}9,50,000$

Question 10. If a borrower makes a partial prepayment on a loan, which is true if the loan tenure is kept constant?

(A) The EMI amount will increase.

(B) The EMI amount will decrease.

(C) The total interest paid over the life of the loan will increase.

(D) The number of remaining EMIs will decrease.

Question 1. Mr. S invested $\textsf{₹}50,000$ in a stock. After 18 months, the value of his investment is $\textsf{₹}60,000$. What is the absolute return on his investment?

(A) $\textsf{₹}50,000$

(B) $\textsf{₹}60,000$

(C) $\textsf{₹}10,000$

(D) 20%

Question 2. For the investment in the previous question ($\textsf{₹}50,000$ grew to $\textsf{₹}60,000$ in 18 months), what is the percentage return over the entire period?

(A) 10%

(B) 16.67%

(C) 20%

(D) 25%

Question 3. A bank advertises a Fixed Deposit rate of 7% per annum. This stated rate is the:

(A) Effective Rate of Return

(B) Real Rate of Return

(C) Nominal Rate of Return

(D) Simple Average Return

Question 4. The revenue of a company was $\textsf{₹}50$ Crore in 2019 and grew to $\textsf{₹}80$ Crore in 2023. To understand the average annual growth rate over this period, you would calculate the:

(A) Simple Average Growth Rate

(B) Absolute Growth

(C) Percentage Growth

(D) Compound Annual Growth Rate (CAGR)

Question 5. For the company in the previous question (Revenue $\textsf{₹}50$ Crore in 2019, $\textsf{₹}80$ Crore in 2023), what is the number of years ($n$) to be used in the CAGR calculation?

(A) 4

(B) 5

(C) 2023

(D) 2019

Question 6. An investment of $\textsf{₹}1,00,000$ grew to $\textsf{₹}1,76,234$ over 8 years. Using the CAGR formula $(End/Start)^{1/n} - 1$, what is the approximate CAGR?

(A) 7%

(B) 8%

(C) 9%

(D) 10%

Question 7. You are comparing two mutual funds: Fund A grew 50% in 5 years, Fund B grew 30% in 3 years. Which metric is best suited to compare their annual performance?

(A) Absolute Return

(B) Total Percentage Return

(C) Simple Average Annual Return

(D) CAGR

Question 8. If an investment was $\textsf{₹}1,00,000$ at the start of 2020 and $\textsf{₹}1,00,000$ at the end of 2022, what is its CAGR for this period?

(A) Positive

(B) Negative

(C) Zero

(D) Cannot be calculated

Question 9. A stock price was $\textsf{₹}100$ in Year 0, $\textsf{₹}120$ in Year 1, $\textsf{₹}110$ in Year 2. The simple average return is $(20\% + (-8.33\%))/2 \approx 5.83\%$. What does CAGR provide for this investment over 2 years?

(A) The same result as the simple average.

(B) A single rate representing the average annual growth considering compounding.

(C) The peak return achieved.

(D) The minimum return experienced.

Question 10. To calculate the percentage return for a one-year period, you need the:

(A) Initial investment amount.

(B) Final investment amount.

(C) Both initial and final amounts.

(D) The interest rate.

Question 1. A manufacturing company buys a new machine for $\textsf{₹}10,00,000$. It is estimated to last for 10 years and have a scrap value of $\textsf{₹}1,00,000$ at the end of its useful life. Using the Straight-Line Method, what is the annual depreciation expense?

(A) $\textsf{₹}1,00,000$

(B) $\textsf{₹}90,000$

(C) $\textsf{₹}1,10,000$

(D) $\textsf{₹}9,00,000$

Question 2. For the machine in the previous question (Cost $\textsf{₹}10,00,000$, Salvage Value $\textsf{₹}1,00,000$, Useful Life 10 years, Straight-Line Method), what is the book value of the machine at the end of Year 5?

(A) $\textsf{₹}5,50,000$

(B) $\textsf{₹}5,00,000$

(C) $\textsf{₹}4,50,000$

(D) $\textsf{₹}1,00,000$

Question 3. A company purchased furniture for $\textsf{₹}1,50,000$ with an estimated useful life of 7 years and no salvage value. What is the annual depreciation expense using the Straight-Line Method?

(A) $\textsf{₹}1,50,000$

(B) $\textsf{₹}21,428.57$

(C) $\textsf{₹}1,35,000$

(D) $\textsf{₹}7,000$

Question 4. For the furniture in the previous question (Cost $\textsf{₹}1,50,000$, Useful Life 7 years, Salvage Value $\textsf{₹}0$, Straight-Line Method), what is the accumulated depreciation at the end of Year 4?

(A) $\textsf{₹}21,428.57$

(B) $\textsf{₹}85,714.28$

(C) $\textsf{₹}64,285.72$

(D) $\textsf{₹}1,50,000$

Question 5. A delivery van was bought for $\textsf{₹}8,00,000$. After 6 years, its book value is $\textsf{₹}2,00,000$ using the Straight-Line Method. If the salvage value is estimated to be $\textsf{₹}80,000$, what is the useful life of the van?

(A) 6 years

(B) 8 years

(C) 10 years

(D) 12 years

Question 6. A company sells a fully depreciated asset (meaning its book value equals its salvage value) for $\textsf{₹}50,000$. The salvage value was estimated at $\textsf{₹}30,000$. How is this sale recorded?

(A) As a loss on sale of $\textsf{₹}20,000$.

(B) As a gain on sale of $\textsf{₹}20,000$.

(C) As a gain on sale of $\textsf{₹}50,000$.

(D) No gain or loss is recorded.

Question 7. A piece of equipment cost $\textsf{₹}2,50,000$, has a useful life of 5 years, and a salvage value of $\textsf{₹}25,000$. After 3 years, the company sells the equipment for $\textsf{₹}1,20,000$. What is the book value at the time of sale using the Straight-Line Method?

(A) $\textsf{₹}1,05,000$

(B) $\textsf{₹}1,15,000$

(C) $\textsf{₹}1,20,000$

(D) $\textsf{₹}1,25,000$

Question 8. Using the data from the previous question (Book Value at sale $\textsf{₹}1,15,000$, Selling Price $\textsf{₹}1,20,000$), what is the gain or loss on the sale of the equipment?

(A) Gain of $\textsf{₹}5,000$

(B) Loss of $\textsf{₹}5,000$

(C) Gain of $\textsf{₹}10,000$

(D) Loss of $\textsf{₹}10,000$

Question 9. A small business owner buys office equipment for $\textsf{₹}40,000$. He estimates it will be useful for 5 years and have a salvage value of $\textsf{₹}5,000$. What is the annual depreciation expense for this equipment using the Straight-Line Method?

(A) $\textsf{₹}8,000$

(B) $\textsf{₹}7,000$

(C) $\textsf{₹}35,000$

(D) $\textsf{₹}5,000$

Question 10. The accumulated depreciation on an asset at the end of Year 3 is $\textsf{₹}21,000$. If the annual depreciation is $\textsf{₹}7,000$ using the Straight-Line Method, and the salvage value is $\textsf{₹}5,000$, what was the original cost of the asset?

(A) $\textsf{₹}26,000$

(B) $\textsf{₹}28,000$

(C) $\textsf{₹}30,000$

(D) $\textsf{₹}35,000$

Question 1. Mr. Anil earns a salary of $\textsf{₹}10,00,000$ per annum. After claiming all eligible deductions, his taxable income is $\textsf{₹}8,50,000$. If the tax slabs are: 0-2.5 Lakh (0%), 2.5-5 Lakh (5%), 5-10 Lakh (20%), how much income tax does he need to pay (ignoring cess/surcharge)?

(A) $\textsf{₹}12,500$

(B) $\textsf{₹}70,000$

(C) $\textsf{₹}82,500$

(D) $\textsf{₹}1,70,000$

Question 2. A retailer sells a product for $\textsf{₹}500$ (base price) and charges 12% GST on it. What is the total price paid by the customer?

(A) $\textsf{₹}500$

(B) $\textsf{₹}560$

(C) $\textsf{₹}512$

(D) $\textsf{₹}506

Question 3. Ms. Bhatia has a taxable income of $\textsf{₹}4,50,000$. Using the tax slabs from Question 101 (0-2.5L@0%, 2.5-5L@5%, 5-10L@20%), how much income tax does she pay (ignoring cess/surcharge)?

(A) $\textsf{₹}0$

(B) $\textsf{₹}10,000$

(C) $\textsf{₹}12,500$

(D) $\textsf{₹}22,500$

Question 4. A manufacturer buys raw materials for $\textsf{₹}10,000$ and pays 18% GST on it. He then sells the finished product for $\textsf{₹}15,000$ and collects 18% GST from the customer. What is the net GST payable by the manufacturer to the government, considering Input Tax Credit (ITC)?

(A) $\textsf{₹}2,700$

(B) $\textsf{₹}1,800$

(C) $\textsf{₹}900$

(D) $\textsf{₹}4,500$

Question 5. If the price of a service including 5% GST is $\textsf{₹}21,000$, what was the price of the service before GST was added?

(A) $\textsf{₹}21,000$

(B) $\textsf{₹}20,000$

(C) $\textsf{₹}19,950$

(D) $\textsf{₹}22,050$

Question 6. Mr. John has a Gross Total Income of $\textsf{₹}12,00,000$. He is eligible for deductions totalling $\textsf{₹}2,50,000$. What is his taxable income?

(A) $\textsf{₹}12,00,000$

(B) $\textsf{₹}2,50,000$

(C) $\textsf{₹}9,50,000$

(D) $\textsf{₹}14,50,000$

Question 7. A consumer buys electronics worth $\textsf{₹}30,000$ (base price) plus 28% GST. What is the amount of GST paid by the consumer?

(A) $\textsf{₹}30,000$

(B) $\textsf{₹}8,400$

(C) $\textsf{₹}38,400$

(D) $\textsf{₹}28,000$

Question 8. A businessman has GST output liability of $\textsf{₹}50,000$ for a month. He has eligible Input Tax Credit (ITC) of $\textsf{₹}35,000$. What is the net amount of GST he needs to pay to the government?

(A) $\textsf{₹}50,000$

(B) $\textsf{₹}35,000$

(C) $\textsf{₹}15,000$

(D) $\textsf{₹}85,000$

Question 9. Ms. Devi has a taxable income of $\textsf{₹}6,00,000$. Using the tax slabs from Question 101 (0-2.5L@0%, 2.5-5L@5%, 5-10L@20%), what is her total income tax liability (ignoring cess/surcharge)?

(A) $\textsf{₹}12,500$

(B) $\textsf{₹}20,000$

(C) $\textsf{₹}32,500$

(D) $\textsf{₹}60,000$

Question 10. If the tax collected on a service at a 12% GST rate is $\textsf{₹}1,800$, what was the original price of the service before GST?

(A) $\textsf{₹}1,800$

(B) $\textsf{₹}15,000$

(C) $\textsf{₹}16,800$

(D) $\textsf{₹}14,000$

Question 1. Your electricity bill shows a previous meter reading of 5500 units and a present reading of 5850 units. How many units of electricity did you consume in this billing period?

(A) 5850 units

(B) 5500 units

(C) 1350 units

(D) 350 units

Question 2. Assume electricity tariff rates: First 100 units @ $\textsf{₹}4$/unit, Next 200 units @ $\textsf{₹}6$/unit, Above 300 units @ $\textsf{₹}8$/unit. If you consumed 250 units, what is the total energy charge?

(A) $\textsf{₹}1,000$

(B) $\textsf{₹}1,500$

(C) $\textsf{₹}2,500$

(D) $\textsf{₹}100 \times 4 + 150 \times 6 = \textsf{₹}1,300$

Question 3. For the consumption of 250 units with the tariff rates from the previous question, if there is a fixed charge of $\textsf{₹}120$ and a service charge of $\textsf{₹}50$, what is the total bill amount before taxes?

(A) $\textsf{₹}1,300$

(B) $\textsf{₹}1,420$

(C) $\textsf{₹}1,470$

(D) $\textsf{₹}1,570$

Question 4. Your water bill shows consumption of 18,000 litres. The tariff is $\textsf{₹}10$ per 1,000 litres for the first 10,000 litres, and $\textsf{₹}15$ per 1,000 litres for consumption above 10,000 litres. What is the water usage charge?

(A) $\textsf{₹}180$

(B) $\textsf{₹}100 + \textsf{₹}120 = \textsf{₹}220$

(C) $\textsf{₹}100 + \textsf{₹}8 \times 15 = \textsf{₹}220$

(D) $\textsf{₹}18 \times 15 = \textsf{₹}270$

Question 5. If your electricity bill includes a 'Fuel Adjustment Charge' which is calculated as a percentage of your energy charge, this falls under which component category?

(A) Fixed Charge

(B) Tariff Rate

(C) Usage

(D) Surcharge or Additional Charge

Question 6. You receive a PNG (Piped Natural Gas) bill showing consumption of 25 SCM. The tariff rate is $\textsf{₹}40$ per SCM, plus a fixed monthly charge of $\textsf{₹}60$. What is the total bill amount before any taxes or surcharges?

(A) $\textsf{₹}1,000$

(B) $\textsf{₹}1,060$

(C) $\textsf{₹}1,100$

(D) $\textsf{₹}940$

Question 7. A penalty for late payment shown on a utility bill is an example of a:

(A) Fixed Charge

(B) Tariff Rate

(C) Surcharge

(D) Service Charge

Question 8. If your bill shows a 'Meter Rent' charge, this is most likely part of the bill's:

(A) Usage Charge

(B) Fixed Charge

(C) Tariff Rate

(D) Surcharge

Question 9. You notice that your electricity consumption for the current month (300 units) is similar to the previous month (290 units), but the total bill is significantly higher. Which of the following is a possible reason that you should investigate by checking the bill components?

(A) The Principal amount increased.

(B) The Loan Tenure decreased.

(C) A Surcharge or change in Tariff rates might have been applied.

(D) Your taxable income increased.

Question 10. When reviewing your water bill, you see a charge labelled "Sewerage Disposal". This charge is often:

(A) A fixed charge unrelated to water usage.

(B) Directly proportional to your water consumption.

(C) A penalty for high water usage.

(D) A government tax, not related to usage.