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Question
If the payment of ₹ 2,000 is made at the end of every quarter for 10 years at the rate of 8% per year, then find the amount of annuity. [(1.02)40 = 2.2080]
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Solution
Here a = 2,000, n = 10 years, and `"i"/"k" = (8/100)/4 = 2/100` = 0.02
A = `"a"/("i"/"k") [(1 + "i"/"k")^("nk") - 1]`
= `200/0.2 [(1 + 0.02)^(10 xx 4) - 1]`
= `200000/2 [(1 + 0.02)^40 - 1]`
= 100000 [2.2080 – 1] .........[∵ (1.02)40 = 2.2080]
= 100000 [1.2080]
= ₹ 1,20,800
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