Question

Find the Amount of an ordinary annuity of $8$ quarterly payments of Rs. $500$ each, the rate of interest being $8\%$ p.a. compounded quarterly.

• A. Rs. $3660.20$
• B. Rs. $3662.50$
• C. Rs. $4275$
• D. Rs. $3670$

Answer 1

The correct option is C Rs. $4275$

Here, $A=$ Rs. $500$, $n=8$

Also $r=\frac{8}{100}\times \frac{1}{4}=0.02$

$M=\frac{A}{r}\times \left[\right(1+r{)}^{\left(n\right)}-1]=\frac{500}{0.02}\times [(1.02{)}^8-1]$

Let $x=\left(1.02{)}^{(}8\right)$

$\Rightarrow \log x=8\log 1.02=0.0688$

$\Rightarrow x=1.171$

$\Rightarrow M=\frac{500}{0.02}\times [1.171-1]=$ Rs $4275$

Thus, the amount is Rs. $4275$.