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Question
Calculate the amount of an ordinary annuity of ₹ 10,000 payable at the end of each half-year for 5 years at 10% per year compounded half-yearly. [(1.05)10 = 1.6289]
Solution
Given a = ₹ 10,000, i = `10/2%` = 5% = 0.05, n = 5 × 2 = 10
P = `"a"/"i" [(1 + "i")^"n" - 1]`
= `10000/0.05 [(1 + 0.05)^10 - 1]`
= `10000/0.05 [(1.05)^10 - 1]`
= 2,00,000 [1.6289 − 1]
= 2,00,000 (0.6289)
= ₹ 1,25,780
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