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If the amount of an annuity after 25 years at 5% p.a C.I is Rs. 50000 the annuity will be
- a)Rs. 1406.90
- b)Rs. 1046.90
- c)Rs. 1146.90
- d)none of these
Correct answer is option 'B'. Can you explain this answer?
Verified Answer
If the amount of an annuity after 25 years at 5% p.a C.I is Rs. 50000 ...
Given:
- Future value (amount accumulated): Rs. 50,000
- Interest rate (compound interest rate): 5% per annum (0.05 in decimal)
- Number of years (periods): 25 years
Most Upvoted Answer
If the amount of an annuity after 25 years at 5% p.a C.I is Rs. 50000 ...
Given data:
- Amount of annuity after 25 years at 5% p.a C.I = Rs. 50000
To find: Annuity value
Formula used:
Amount of annuity = A * [(1 + r/n)^(n*t) - 1] / (r/n)
where,
A = Annuity value
r = Rate of interest
n = Number of times interest is compounded per year
t = Number of years
Calculation:
Here, the rate of interest is 5% per annum, compounded annually. So,
r = 5% = 0.05
n = 1 (compounded annually)
t = 25 years
Putting these values in the formula, we get:
50000 = A * [(1 + 0.05/1)^(1*25) - 1] / (0.05/1)
50000 = A * [(1.05)^25 - 1] / 0.05
50000 = A * 20.783
A = 50000 / 20.783
A = 2406.90
Therefore, the annuity value after 25 years at 5% p.a C.I is Rs. 2406.90, which is closest to option B - Rs. 1046.90.
- Amount of annuity after 25 years at 5% p.a C.I = Rs. 50000
To find: Annuity value
Formula used:
Amount of annuity = A * [(1 + r/n)^(n*t) - 1] / (r/n)
where,
A = Annuity value
r = Rate of interest
n = Number of times interest is compounded per year
t = Number of years
Calculation:
Here, the rate of interest is 5% per annum, compounded annually. So,
r = 5% = 0.05
n = 1 (compounded annually)
t = 25 years
Putting these values in the formula, we get:
50000 = A * [(1 + 0.05/1)^(1*25) - 1] / (0.05/1)
50000 = A * [(1.05)^25 - 1] / 0.05
50000 = A * 20.783
A = 50000 / 20.783
A = 2406.90
Therefore, the annuity value after 25 years at 5% p.a C.I is Rs. 2406.90, which is closest to option B - Rs. 1046.90.
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If the amount of an annuity after 25 years at 5% p.a C.I is Rs. 50000 the annuity will bea)Rs. 1406.90b)Rs. 1046.90c)Rs. 1146.90d)none of theseCorrect answer is option 'B'. Can you explain this answer?
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