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An annuity consisting of payments of Rs. 500 made at the end of every 3 months for 4 years at the rate of 6% compounded quarterly. Its Future value is?
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Calculation of Future Value of Annuity
An annuity is a series of equal payments made at regular intervals. In this case, the annuity consists of payments of Rs. 500 made at the end of every 3 months for 4 years. The rate of interest is 6% compounded quarterly. We need to calculate the future value of this annuity.
Formula to Calculate Future Value of Annuity
The formula to calculate the future value of an annuity is:
FV = (PMT x (((1 + r/n)^(n*t)) - 1)) / (r/n)
Where,
- FV = Future value of annuity
- PMT = Payment made at regular intervals
- r = Annual interest rate
- n = Number of compounding periods per year
- t = Number of years
Calculation of Future Value of Annuity
Using the formula mentioned above, we can calculate the future value of the annuity as follows:
FV = (500 x (((1 + 0.06/4)^(4*4)) - 1)) / (0.06/4)
FV = Rs. 27,521.59
Explanation
The future value of the annuity is Rs. 27,521.59. This means that if you invest Rs. 500 at the end of every 3 months for 4 years at an interest rate of 6% compounded quarterly, the value of your investment would be Rs. 27,521.59 after 4 years. This is because the interest earned on the investment is reinvested, leading to compounding of interest.
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An annuity consisting of payments of Rs. 500 made at the end of every 3 months for 4 years at the rate of 6% compounded quarterly. Its Future value is?
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An annuity consisting of payments of Rs. 500 made at the end of every 3 months for 4 years at the rate of 6% compounded quarterly. Its Future value is? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about An annuity consisting of payments of Rs. 500 made at the end of every 3 months for 4 years at the rate of 6% compounded quarterly. Its Future value is? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for An annuity consisting of payments of Rs. 500 made at the end of every 3 months for 4 years at the rate of 6% compounded quarterly. Its Future value is?.
An annuity consisting of payments of Rs. 500 made at the end of every 3 months for 4 years at the rate of 6% compounded quarterly. Its Future value is? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about An annuity consisting of payments of Rs. 500 made at the end of every 3 months for 4 years at the rate of 6% compounded quarterly. Its Future value is? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for An annuity consisting of payments of Rs. 500 made at the end of every 3 months for 4 years at the rate of 6% compounded quarterly. Its Future value is?.
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