Find the amount at the end of 12 years of an annuity of Rs 5,000 payab

1.	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» 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

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»

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