Rs.200 is invested at the end of each month in an account paying interest 6% compounded monthly. What is future value of annuity after 10th payment
Gud
To find the future value of an annuity after the 10th payment, we need to use the formula for the future value of an ordinary annuity:
Future Value = P * [(1 + r)^n - 1] / r
Where:
P = Payment amount per period
r = Interest rate per period
n = Number of periods
In this case, the payment amount per period (P) is Rs. 200, the interest rate per period (r) is 6% or 0.06, and the number of periods (n) is 10.
Now, let's substitute these values into the formula:
Future Value = 200 * [(1 + 0.06)^10 - 1] / 0.06
To calculate this, we can use a calculator or a spreadsheet. The value for [(1 + 0.06)^10 - 1] / 0.06 is approximately 13.182.
So, the future value of the annuity after the 10th payment would be:
Future Value = 200 * 13.182 = Rs. 2,636.40