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Mr. A invested ₹20,000 every year for next 3 years at the interest rate of 8 percent per annum compounded annually. What is future value of the annuity? (1.08)^3 = 1.2597) (a) 62644 (b) 62464 (c) 64928 (d) 63442?
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Mr. A invested ₹20,000 every year for next 3 years at the interest rat...
Future Value of Annuity:
The future value of an annuity is the total value of a series of equal cash flows or investments at a specific point in the future. It is calculated using the compound interest formula.
Given:
Principal amount (P) = ₹20,000
Number of years (n) = 3
Interest rate (r) = 8% per annum
Step 1: Calculate the future value of each annual investment:
Using the compound interest formula:
Future Value (FV) = P(1 + r)^n
For the first year:
FV1 = ₹20,000(1 + 0.08)^1 = ₹20,000(1.08) = ₹21,600
For the second year:
FV2 = ₹20,000(1 + 0.08)^2 = ₹20,000(1.1664) = ₹23,328
For the third year:
FV3 = ₹20,000(1 + 0.08)^3 = ₹20,000(1.2597) = ₹25,194
Step 2: Calculate the total future value of the annuity:
To calculate the total future value, we need to sum up the future values of all the annual investments.
Total FV = FV1 + FV2 + FV3
= ₹21,600 + ₹23,328 + ₹25,194
= ₹70,122
Therefore, the future value of the annuity is ₹70,122.
Answer:
The correct option is (d) ₹70,122.
The future value of an annuity is the total value of a series of equal cash flows or investments at a specific point in the future. It is calculated using the compound interest formula.
Given:
Principal amount (P) = ₹20,000
Number of years (n) = 3
Interest rate (r) = 8% per annum
Step 1: Calculate the future value of each annual investment:
Using the compound interest formula:
Future Value (FV) = P(1 + r)^n
For the first year:
FV1 = ₹20,000(1 + 0.08)^1 = ₹20,000(1.08) = ₹21,600
For the second year:
FV2 = ₹20,000(1 + 0.08)^2 = ₹20,000(1.1664) = ₹23,328
For the third year:
FV3 = ₹20,000(1 + 0.08)^3 = ₹20,000(1.2597) = ₹25,194
Step 2: Calculate the total future value of the annuity:
To calculate the total future value, we need to sum up the future values of all the annual investments.
Total FV = FV1 + FV2 + FV3
= ₹21,600 + ₹23,328 + ₹25,194
= ₹70,122
Therefore, the future value of the annuity is ₹70,122.
Answer:
The correct option is (d) ₹70,122.
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Mr. A invested ₹20,000 every year for next 3 years at the interest rate of 8 percent per annum compounded annually. What is future value of the annuity? (1.08)^3 = 1.2597) (a) 62644 (b) 62464 (c) 64928 (d) 63442?
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Mr. A invested ₹20,000 every year for next 3 years at the interest rate of 8 percent per annum compounded annually. What is future value of the annuity? (1.08)^3 = 1.2597) (a) 62644 (b) 62464 (c) 64928 (d) 63442? 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 Mr. A invested ₹20,000 every year for next 3 years at the interest rate of 8 percent per annum compounded annually. What is future value of the annuity? (1.08)^3 = 1.2597) (a) 62644 (b) 62464 (c) 64928 (d) 63442? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Mr. A invested ₹20,000 every year for next 3 years at the interest rate of 8 percent per annum compounded annually. What is future value of the annuity? (1.08)^3 = 1.2597) (a) 62644 (b) 62464 (c) 64928 (d) 63442?.
Mr. A invested ₹20,000 every year for next 3 years at the interest rate of 8 percent per annum compounded annually. What is future value of the annuity? (1.08)^3 = 1.2597) (a) 62644 (b) 62464 (c) 64928 (d) 63442? 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 Mr. A invested ₹20,000 every year for next 3 years at the interest rate of 8 percent per annum compounded annually. What is future value of the annuity? (1.08)^3 = 1.2597) (a) 62644 (b) 62464 (c) 64928 (d) 63442? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Mr. A invested ₹20,000 every year for next 3 years at the interest rate of 8 percent per annum compounded annually. What is future value of the annuity? (1.08)^3 = 1.2597) (a) 62644 (b) 62464 (c) 64928 (d) 63442?.
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