CA Foundation P3 · Chapter 4 · Question 6 of 10
₹5,000 is deposited at the end of each year for 4 years at 10% per annum compounded annually. The amount at the end of 4 years is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) ₹23,205
Explanation
Future value of an ordinary annuity = A[(1 + i)ⁿ − 1]/i = 5,000 x (1.1⁴ − 1)/0.1 = 5,000 x (1.4641 − 1)/0.1 = 5,000 x 4.641 = ₹23,205. ₹15,849.33 is the present value, ₹25,525.50 is the annuity-due amount (x 1.1), and ₹20,000 ignores interest.
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