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Question
An annuity immediate is to be paid for some years at 12% p.a. The present value of the annuity is ₹ 10,000 and the accumulated value is ₹ 20,000. Find the amount of each annuity payment
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Solution
Given, P = ₹ 10,000, r = 12% p.a., A = ₹ 20,000
∴ i = `"r"/(100) = (12)/(100)` = 0.12
Now, `(1)/"P" - (1)/"A" = "i"/"C"`
∴ `(1)/(10,000) - (1)/(20,000) = (0.12)/"C"`
∴ `(2 - 1)/(20,000) = (012)/"C"`
∴ `(1)/(20,000) = (0.12)/"C"`
∴ C = (0.12)(20,000)
∴ C = 2,400
∴ The amount of each annuity payment is ₹ 2,400.
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