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Question
Find the amount of annuity of ₹ 2000 payable at the end of each year for 4 years of money is worth 10% compounded annually. [(1.1)4 = 1.4641]
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Solution
Given a = ₹ 2000
i = 10% = 0.1
n = 4
A = `"a"/"i" [(1 + "i")^"n" - 1]`
= `2000/0.1 [1 + 0.1]^4 - 1`
= `2000/0.1 [(1.1)^4 - 1]`
= 20,000 [1.4641 − 1] ........[∵ (1.1)4 = 1.4641]
= 20,000 (0.4641)
A = ₹ 9,282
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