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Question
Find the amount of an annuity of ₹ 2000 payable at the end of every month for 5 years if money is worth 6% per annum compounded monthly. [(1.005)60 = 1.3489]
Solution
Given a = ₹ 2000, i = `6/12%` = 0.5% = 0.005, n = 5 × 12 = 60
P = `"a"/"i" [(1 + "i")^"n" - 1]`
= `2000/0.005 [(1 + 0.005)^60 - 1]`
= `2000/0.005 [(1.005)^60 - 1]`
= 4,00,000 [1.3489 − 1]
= 4,00,000 (0.3489)
= ₹ 1,39,560
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