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Question
Find the present value of an annuity of ₹ 900 payable at the end of 6th month for 6 years. The money compounded at 8% per annum. [(1.04)–12 = 0.6252]
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Solution
P = `"a"/("i"/2) [1 - 1/(1 + "i"/2)^(2 xx 6)]`
= `(900 xx 2)/(8/100) [1 - 1/(1 + (8//100)/2)^12]`
= `(900 xx 2 xx 100)/8 [1 - (1 + 0.04)^(-12)]`
= 900 × 25 [1 − (1.04)−12]
= 22500 [1 − 0.6252]
= 22500 × 0.3748
= ₹ 8,433
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