Question

Find the amount at the end of 12 years of an annuity of Rs 5,000 payable at the beginning of each year, if the money is compounded at 10% per annum.

Answer 1

Here a = 5000, i = 10% = \(\frac{10}{100}\) = 0.1, n = 12

Amount A = (1 + i) \(\frac{a}{i}\)[(1 + i)ⁿ – 1] 

= (1 + 0.1) \(\frac{5000}{\frac{10}{100}}\)[(1 + 0.1)¹² – 1] 

= (1.1) 50000 [(1.1)¹² – 1] 

= 55000 [3.1384 – 1] 

= 55000 [2.1384] 

= Rs 1,17,612