Home Class 11 Applied Maths Chapter 13: Interests and Annuities

CBSE Applied Maths (2026-27) Unit VI: Basics of Financial Mathematics Weightage: ~15 Marks in Unit

Chapter 13: Interests and Annuities

Master compound interest compounding intervals, continuous compounding, nominal vs effective rates, ordinary/due annuities, and loan EMI schedules.

4 Exercises

CBSE Curriculum Aligned

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Chapter Exercises & Topics

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Exercise 13.1 45 mins

Simple interest review: I = Prt / 100
Compound interest with varying compounding periods (annual, semi-annual, quarterly, monthly)
Concept of continuous compounding: A = P · e^{rt}
Nominal rate versus Effective Annual Rate (EAR): EAR = (1 + r/m)^m - 1

Study Exercise Mini Test

Exercise 13.2 45 mins

Study Exercise Mini Test

Exercise 13.3 45 mins

Study Exercise Mini Test

Exercise 13.4 45 mins

Sinking funds and capital recovery
Loan amortization schedules
Equated Monthly Installment (EMI) calculations using formula and tabular breakdown

Study Exercise Mini Test

Quick-glance formula revision for examination and numerical problem-solving:

$$A = P\left(1 + \frac{r}{m}\right)^{mt}, \quad A = P e^{rt} \text{ (Continuous)}$$
$$EAR = \left(1 + \frac{r}{m}\right)^m - 1, \quad r_{\text{effective}} = e^r - 1$$
$$\text{Ordinary Annuity: Cash flow at period END}$$
$$\text{Annuity Due: Cash flow at period BEGINNING}$$
$$\text{Perpetuity: Infinite stream of periodic payments}$$
$$FV = R \left[\frac{(1+i)^n - 1}{i}\right], \quad PV = R \left[\frac{1 - (1+i)^{-n}}{i}\right]$$
$$PV_{\text{due}} = PV_{\text{ordinary}} \times (1+i), \quad PV_{\text{perpetuity}} = \frac{R}{i}$$
$$EMI = \frac{P \times r \times (1+r)^n}{(1+r)^n - 1}$$
$$\text{Sinking Fund Payment: } R = \frac{A \times i}{(1+i)^n - 1}$$