Question

Z invests Rs. $10,000$ every year starting for today for next $10$ years. Suppose interest rate is $8\%$ per annum compounded annually. Calculate future value of the annuity. Given that $(1+0.08{)}^{10}=2.15892500$.

• A. $1,44,865.625$
• B. $1,56,454.875$
• C. $1,54,654.875$
• D. $1,44,568.625$

Answer 1

The correct option is B $1,56,454.875$

Step-$1$: Calculate future value as though it is an ordinary annuity
Future value of the annuity as if it is an ordinary annuity
$=10,000\left[\frac{(1+0.08{)}^{10}-1}{0.08}\right]$
$=10,000\times 14.4865625$
$=Rs.1,44,865.625$
Step-$2$: Multiply the result by $(1+i)$
$=1,44,865.625\times (1+0.08)$
$=1,56454.875$.