A person plans to put ₹400 at the beginning of each year for 2 years in a deposit that gives interest at 2% p.a. compounded annually. Find the amount that will be accumulated at the end of 2 years. - Mathematics and Statistics

Sum

A person plans to put ₹400 at the beginning of each year for 2 years in a deposit that gives interest at 2% p.a. compounded annually. Find the amount that will be accumulated at the end of 2 years.

Solution

Given, C = ₹400, n = 2 years, r = 2% p.a.

i = "r"/(100) = (2)/(100) = 0.02

Now,A = ("C"(1 + "i"))/"i"[(1 + "i")^"n" - 1]

∴ A = (400(1 + 0.02))/(0.02)[(1 + 0.02)^2 - 1]

= (400(1.02))/(0.02)[(1.02)^2 - 1]

= (400)(51)[1.0404 – 1]
= 20,400(0,0404)
A = 824.16
∴ Accumulated amount after 2 years is ₹824.16.

Concept: Annuity
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Chapter 2: Insurance and Annuity - Exercise 2.2 [Page 28]

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Balbharati Mathematics and Statistics 2 (Commerce) 12th Standard HSC Maharashtra State Board
Chapter 2 Insurance and Annuity
Exercise 2.2 | Q 1.12 | Page 28
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