Target Exam

CUET

Subject

-- Applied Mathematics - Section B2

Chapter

Financial Mathematics

Question:

Match List – I with List – II.

LIST I

LIST II

 A. The present value of an immediate perpetuity of ₹R payable at end of any year forever at rate of i per period is: 

 I. $\frac{R}{i}[1+i]^{-m}$ 

 B. Present value of deferred perpetuity is 

 II. $\frac{A i}{(1+i)^n-1}$ 

 C. Periodic payment R in a sinking fund is given by formula (for Amount A) 

 III. $A(1+i)^{-n}$ 

 D. The present value of redemption price A of a bond is given by 

 IV. $\frac{R}{i}$ 

Choose the correct answer from the options given below:

Options:

A - IV, B - I, C - II, D - III

A - I, B - II, C - III, D - IV

A - II, B - III, C - IV, D - I

A - III, B - IV, C - I, D - II

Correct Answer:

A - IV, B - I, C - II, D - III

Explanation:

The correct answer is Option (1) → A - IV, B - I, C - II, D - III

$\text{(A)}\; \text{Immediate perpetuity} \Rightarrow \frac{R}{i} \Rightarrow \text{(IV)}$

$\text{(B)}\; \text{Deferred perpetuity} \Rightarrow \frac{R}{i}(1+i)^{-m} \Rightarrow \text{(I)}$

$\text{(C)}\; \text{Sinking fund} \Rightarrow R=\frac{Ai}{(1+i)^n-1} \Rightarrow \text{(II)}$

$\text{(D)}\; \text{Present value of redemption price} \Rightarrow A(1+i)^{-n} \Rightarrow \text{(III)}$

A–IV,\; B–I,\; C–II,\; D–III