Example 7.1
A person pays ₹ 64,000
per annum for 12 years at the rate of 10% per year. Find the annuity [(1.1)12=3.3184]
Solution :
Example 7.2
What amount should be deposited
annually so that after 16 years a person receives ₹1,67,160 if the interest rate is
15% [(1.15)16=9.358]
Solution :
Example 7.3
The age of the daughter is 2
years. Her father wants to get ₹20,00,000 when his ward becomes
22 years He opens an account with a bank at 10% rate of compound interest. What
amount should he deposit at the end of every month in this recurring account?
[(1.0083)240=6.194].
Solution :
₹3,209 is to be deposited at the
end of every month.
Example 7.4
A person deposits ₹4,000 in
the beginning of every year. If the rate of compound interest is 14% then ,find
the amount after 10 years . [(1.14)10=3.707]
Solution :
Example 7.5
A person purchases a machine on
1st January 2009 and agrees to pay 10 installments each of ₹12,000 at
the end of every year inclusive of compound rate of 15%. Find the present value
of the machine. [(1.15)10=4.016].
Solution :
Example 7.6
A photographer purchases a camera on installments. He has to pay 7 annual installments each of ₹36,000 right from the date of purchase. If the rate of compound interest is 16% then find the cost price (present value) of the camera. [(1.16)7=2.2828]
Solution :
Example 7.7
A person has taken a loan of ₹7,00,000
at 16% rate of interest from a finance company. If the repayment period is of
15 years then find the installment he has to pay at the beginning of each
month. [(1.0133)180=9.772]
Solution :
Example 7.8
The chairman of a society wishes
to award a gold medal to a student getting highest marks in Business
Mathematics. If this medal costs ₹9,000 every year and the rate of
compound interest is 15% what amount is to be deposited now.
Solution :
Here a = 9,000 and i = 0.15
Therefore the amount to be
deposited is ₹ 60,000.
Example 7.9
A limited company wants to create
a fund to help their employees in critical circumstances. The estimated
expenses per month is ₹18,000.Find the amount to be
deposited by the company if the rate of compound interest is 15%.
Solution :
Here a = 18,000 ; i = 0.15 and
k = 12.
Therefore the amount to be
deposited is ₹14,40,000.
Example 7.10
Find the half yearly rate of
interest, to get a perpetuity of ₹675 for every half yearly from
the present value of ₹30,000/
Solution :
Here P=30,000 ; a = 675 ; k = 2, i = ?
Exercise 7.1
1. Find
the amount of an ordinary annuity of ₹3,200 per annum for 12 years at
the rate of interest of 10% per year. [(1.1)12 = 3.3184]
2. If the
payment of ₹2,000 is made at the end of every quarter for 10 years at the rate of 8%
per year, then find the amount of annuity. [(1.02)40=2.2080 ]
3. Find
the amount of an ordinary annuity of 12 monthly payments of ₹1, 500
that earns interest at 12% per annum compounded monthly. [(1.01)12 =
1.1262 ]
4. A bank
pays 8% per annum interest compounded quarterly. Find the equal deposits to be
made at the end of each quarter for 10 years to have ₹30,200 ?
[(1.02)40 =2.2080]
5. A
person deposits ₹2,000 from his salary towards his
contributory pension scheme. The same amount is credited by his employer also.
If 8% rate of compound interest is paid, then find the maturity amount at end of
20 years of service. [(1.0067)240 = 3.3266 ]
6. Find
the present value of ₹2,000 per annum for 14 years at
the rate of interest of 10% per annum. [ (1.1)–14= 0.2632]
7. Find
the present value of an annuity of ₹900 payable at the end of 6
months for 6 years. The money compounded at 8% per annum. [(1.04)–12=0.6252
]
8. Find
the amount at the end of 12 years of an annuity of ₹5,000 payable at the beginning of
each year, if the money is compounded at 10% per annum.
9. What is the present value of
an annuity due of ₹1,500 for 16 years at 8% per
annum? [ (1.08)15 = 3.1696 ]
10. What is the amount of
perpetual annuity of ₹50 at 5% compound interest per
year?
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