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The value of the amount at the end of 12 years of an annuity of 1200 payable at the beginning of each year for 12 year at 8% p.a. c i is?
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The value of the amount at the end of 12 years of an annuity of 1200 p...
Understanding Annuity Payments
An annuity is a series of equal payments made at regular intervals. In this case, we have an annuity of 1200 payable at the beginning of each year for 12 years, with an interest rate of 8% per annum compounded annually.
Future Value of Annuity Due
Since the payments are made at the beginning of each period, we need to calculate the future value of an annuity due. The formula for the future value of an annuity due is:
- FV = P * [(1 + r)^n - 1] / r * (1 + r)
Where:
- FV = Future Value
- P = Payment per period (1200)
- r = Interest rate per period (0.08)
- n = Total number of payments (12)
Calculating Future Value
1. Identify Variables:
- P = 1200
- r = 0.08
- n = 12
2. Compute (1 + r)^n:
- (1 + 0.08)^12 = 2.51817 (approximately)
3. Calculate Future Value:
- FV = 1200 * [(2.51817 - 1) / 0.08] * (1 + 0.08)
- FV = 1200 * (18.9766) * (1.08)
- FV = 1200 * 20.5191 (approximately)
- FV = 24623.01 (approximately)
Final Amount
The value of the amount at the end of 12 years from the annuity of 1200 payable at the beginning of each year at an interest rate of 8% per annum is approximately 24623.01. This calculation illustrates how the power of compounding can significantly increase the future value of regular payments over time.
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The value of the amount at the end of 12 years of an annuity of 1200 payable at the beginning of each year for 12 year at 8% p.a. c i is?
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The value of the amount at the end of 12 years of an annuity of 1200 payable at the beginning of each year for 12 year at 8% p.a. c i 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 The value of the amount at the end of 12 years of an annuity of 1200 payable at the beginning of each year for 12 year at 8% p.a. c i is? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The value of the amount at the end of 12 years of an annuity of 1200 payable at the beginning of each year for 12 year at 8% p.a. c i is?.
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