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Question
State whether the following is True or False :
The present value of an annuity is the sum of the present value of all installments.
Options
True
False
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Solution
The present value of an annuity is the sum of the present value of all installments True.
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Rental payment for an apartment is an example of
Fill in the blank :
An annuity where payments continue forever is called __________.
Fill in the blank :
If payments of an annuity fall due at the beginning of every period, the series is called annuity __________.
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[Given (1.1)4 = 1.4641]
For annuity due,
C = ₹ 20,000, n = 3, I = 0.1, (1.1)–3 = 0.7513
Therefore, P = `square/0.1 xx [1 - (1 + 0.1)^square]`
= 2,00,000 [1 – 0.7513]
= ₹ `square`
