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State whether the following statement is True or False: The future value of an annuity is the accumulated values of all instalments

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Question

State whether the following statement is True or False:

The future value of an annuity is the accumulated values of all instalments

Options

  • True

  • False

MCQ
True or False
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Solution

True

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Annuity
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Chapter 2.2: Insurance and Annuity - Q.2

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The future amount, A = ₹ 10,00,000

Period, n = 20, r = 5%, (1.025)20 = 1.675

A = `"C"/"I" [(1 + "i")^"n" - 1]`

I = `5/200` = `square` as interest is calculated semi-annually

A = 10,00,000 = `"C"/"I" [(1 + "i")^"n" - 1]`

10,00,000 = `"C"/0.025 [(1 + 0.025)^square - 1]`

= `"C"/0.025 [1.675 - 1]`

10,00,000 = `("C" xx 0.675)/0.025`

C = ₹ `square`


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