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Mr X purchase a house for Rs.5 lakhs he started to pay for the house in 10 equal instalments at the end of each year if money words 8% effective what would be the size of each instalment? find the amount of this annuity.?
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Mr X purchase a house for Rs.5 lakhs he started to pay for the house i...
Calculating the Size of Each Instalment
To calculate the size of each instalment, we can use the formula for the present value of an annuity:
PV = PMT × [(1 - (1 + r)^(-n)) / r]
Where:
PV = Present Value
PMT = Payment (Size of each instalment)
r = Interest rate per period
n = Number of periods
In this case, Mr. X purchased a house for Rs. 5 lakhs and needs to pay it off in 10 equal instalments at the end of each year. The interest rate is 8% effective.
We can substitute the given values into the formula to find the size of each instalment:
PV = 5 lakhs
r = 8% = 0.08
n = 10
5 lakhs = PMT × [(1 - (1 + 0.08)^(-10)) / 0.08]
Solving this equation for PMT will give us the size of each instalment.
Calculating the Amount of the Annuity
To calculate the amount of the annuity, we can simply multiply the size of each instalment by the number of instalments.
In this case, the number of instalments is 10, and we can substitute the calculated size of each instalment into the formula:
Amount of Annuity = PMT × n
Calculation
Using a financial calculator or spreadsheet software, we can calculate the size of each instalment and the amount of the annuity.
PMT = Rs. 5 lakhs × (0.08 / (1 - (1 + 0.08)^(-10))) ≈ Rs. 79,006.14
Amount of Annuity = Rs. 79,006.14 × 10 = Rs. 7,90,061.40
Therefore, the size of each instalment is approximately Rs. 79,006.14 and the amount of the annuity is approximately Rs. 7,90,061.40.
Conclusion
Mr. X will need to pay approximately Rs. 79,006.14 at the end of each year for 10 years to pay off the house he purchased for Rs. 5 lakhs. The total amount paid over the 10-year period will be approximately Rs. 7,90,061.40.
To calculate the size of each instalment, we can use the formula for the present value of an annuity:
PV = PMT × [(1 - (1 + r)^(-n)) / r]
Where:
PV = Present Value
PMT = Payment (Size of each instalment)
r = Interest rate per period
n = Number of periods
In this case, Mr. X purchased a house for Rs. 5 lakhs and needs to pay it off in 10 equal instalments at the end of each year. The interest rate is 8% effective.
We can substitute the given values into the formula to find the size of each instalment:
PV = 5 lakhs
r = 8% = 0.08
n = 10
5 lakhs = PMT × [(1 - (1 + 0.08)^(-10)) / 0.08]
Solving this equation for PMT will give us the size of each instalment.
Calculating the Amount of the Annuity
To calculate the amount of the annuity, we can simply multiply the size of each instalment by the number of instalments.
In this case, the number of instalments is 10, and we can substitute the calculated size of each instalment into the formula:
Amount of Annuity = PMT × n
Calculation
Using a financial calculator or spreadsheet software, we can calculate the size of each instalment and the amount of the annuity.
PMT = Rs. 5 lakhs × (0.08 / (1 - (1 + 0.08)^(-10))) ≈ Rs. 79,006.14
Amount of Annuity = Rs. 79,006.14 × 10 = Rs. 7,90,061.40
Therefore, the size of each instalment is approximately Rs. 79,006.14 and the amount of the annuity is approximately Rs. 7,90,061.40.
Conclusion
Mr. X will need to pay approximately Rs. 79,006.14 at the end of each year for 10 years to pay off the house he purchased for Rs. 5 lakhs. The total amount paid over the 10-year period will be approximately Rs. 7,90,061.40.
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Mr X purchase a house for Rs.5 lakhs he started to pay for the house in 10 equal instalments at the end of each year if money words 8% effective what would be the size of each instalment? find the amount of this annuity.?
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Mr X purchase a house for Rs.5 lakhs he started to pay for the house in 10 equal instalments at the end of each year if money words 8% effective what would be the size of each instalment? find the amount of this annuity.? for B Com 2025 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about Mr X purchase a house for Rs.5 lakhs he started to pay for the house in 10 equal instalments at the end of each year if money words 8% effective what would be the size of each instalment? find the amount of this annuity.? covers all topics & solutions for B Com 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Mr X purchase a house for Rs.5 lakhs he started to pay for the house in 10 equal instalments at the end of each year if money words 8% effective what would be the size of each instalment? find the amount of this annuity.?.
Mr X purchase a house for Rs.5 lakhs he started to pay for the house in 10 equal instalments at the end of each year if money words 8% effective what would be the size of each instalment? find the amount of this annuity.? for B Com 2025 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about Mr X purchase a house for Rs.5 lakhs he started to pay for the house in 10 equal instalments at the end of each year if money words 8% effective what would be the size of each instalment? find the amount of this annuity.? covers all topics & solutions for B Com 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Mr X purchase a house for Rs.5 lakhs he started to pay for the house in 10 equal instalments at the end of each year if money words 8% effective what would be the size of each instalment? find the amount of this annuity.?.
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