Related Mcqs:

1. The amount of simple interest during ‘n’ interest period is (where, i = interest rate based on the length of one interest period, p = principal) ?

   A. p.i.n.
   B. p(1 + i.n)
   C. p(1 + i)n
   D. p(1 – i.n)

2. If ‘S’ is the amount available after ‘n’ interest periods for an initial principal ‘P’ with the discrete compound interest rate ‘i’, the present worth is given by__________________?

   A. (1 + i)n/S
   B. S/(1 + i)n
   C. S/(1 + in)
   D. S/(1 + n)i

3. An investment of Rs. 1000 is carrying an interest of 10% compounded quarterly. The value of the investment at the end of five years will be ________________?

   A. 1000 (1 + 0.1/4)20
   B. 1000 (1 + 0.1)20
   C. 1000 (1 + 0.1/4)5
   D. 1000 (1 + 0.1/2)5

4. If the interest rate of 10% per period is compounded half yearly, the actual annual return on the principal will be ______________ percent ?

   A. 10
   B. 20
   C. > 20
   D. < 20

5. An annuity is a series of equal payments occuring at equal time intervals, and this amount includes the sum of all payments plus interest, if allowed to accumulate at a definite rate of interest from the time of initial payment to the end of annuity term. Ordinary annuity is used in the calculation of the__________________?

   A. Manufacturing cost
   B. Depreciation by sinking fund method
   C. Discrete compound interest
   D. Cash ratio

6. Effective and nominal interest rates are equal, when the interest is compounded__________________?

   A. Annually
   B. Fortnightly
   C. Monthly
   D. Half-yearly

7. Nominal and effective interest rates are equal, when the interest is compounded______________?

   A. Quarterly
   B. Semi-annually
   C. Annually
   D. In no case, they are equal

8. If an amount R is paid at the end of every year for ‘n’ years, then the net present value of the annuity at an interest rate of i is _________________?

   A. R [{(1 + i)n – 1}/ i ]
   B. R [{(1 + i)n – 1}/ i (1 + i)n]
   C. R(1 + i)n
   D. R/(1 + i)n

9. ________________ of depreciation calculation does not take into account the interest on investments?

   A. Present worth method
   B. Sinking fund method
   C. Sum of the years-digits method
   D. All A, B. and C.

10. _________________ of depreciation calculation accounts for the interest on investment?

    A. Straight line method
    B. Declining balance
    C. Both A. and B.
    D. Neither A. nor B.