__AFB Last Minute Revision__

Paper X

Paper X

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

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